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Travis Perkins share price: Group targets ‘double digit’ earnings growth

UK’s top building materials supplier rides high on rise in construction

by Branimir Kondov

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Travis Perkins share price: Group targets ‘double digit’ earnings growth

Travis Perkins share price: Group targets ‘double digit’ earnings growth, Wednesday, December 18: Travis Perkins (LON:TPK) is targeting "double digit" annual growth in earnings before interest, tax and amortisation over the medium term, according to the group’s new chief executive, John Carter.

Travis Perkins’ share price was 1.62 percent higher at 1,760p as of 12:10 UTC today, valuing the business at £4.32 billion.

Carter, who will succeed Geoff Cooper at the helm of the UK’s biggest supplier of building materials from January, told investors and analysts during a capital markets day earlier this month that he is targeting like-for-like sales growth outperformance of between one and three percent across the group. He also plans to sustain a "sector leading" operating margin growth in the group’s general merchanting division and achieve "good growth" in its plumbing and heating, contracts and consumer divisions.

Other targets for the group are annual capital spending of £130-£170 million in the 2014/15 year and a progressive dividend with cover range of 2.5-3.25 times earnings from the 2014/15 year onwards. John Carter commented: "We have worked very hard over the past few years to ensure we have the right portfolio of businesses to continue to outperform the market. Our businesses have good plans in place and we are investing to further extend our market leading customer propositions”.

Travis Perkins operates businesses such as Keyline, Tile Giant, ToolStation and Wickes and has about 1,800 outlets across the UK. The company joined the blue-chip FTSE 100 index in June. The group’s share price has increased more than 60 percent this year, benefitting from a rise in homebuilding activity which has been stimulated by the government’s Help to Buy initiative.

As a result of the buoyant share price, more than 7,000 staff are to share nearly £17 million following the maturity of a five-year sharesave scheme on December 1. The three-year and five-year sharesave schemes were launched in 2002 and were available to all employees of the group.

Carol Kavanagh, group human resources director at Travis Perkins, commented: “Employees who contributed £250 a month into our 2008 five-year scheme now have a total investment worth more than £62,000 (based on the share price on 10 December), which is a great way to save for the future and certainly delivers a very nice windfall for those who’ve invested in the scheme.”

In an interim management statement for the three months to end-September Travis Perkins said: “The positive sales momentum experienced in the second quarter of 2013 continued into the third quarter.”

“Total sales growth of 8.6 percent, 7.1 percent on a comparable trading days basis, and like-for-like sales growth of 6.3 percent demonstrate the Group's strong position in each of its markets and its ability to leverage improving sentiment,” the group highlighted.

The group also said that it is on track to achieve earnings per share of around 100p despite lower property disposal gains.

As of 12:04 UTC buy Travis Perkins shares at 1,760p

As of 12:04 UTC sell Travis Perkins shares at 1,758p

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