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04 Mar, 2008

By Douglas Bence | 1:23:00 PM | Tuesday, March 04, 2008

The slowdown in the housing market is reflected in the latest trading figures from builders merchant Travis Perkins.

Chief executive Geoff Cooper says like-for-like sales in the merchanting division for the first two months of the year are 5.7% ahead, while like-for-like sales for the first eight weeks of retail trading are up 0.9%

'These rates are some 3% to 4% below the like-for-like sales trends we achieved in the fourth quarter of 2007,' he said.

Accurately forecasting the rest of the year is challenging, but cost inflation remains and will increase the value of the market although it may take time to establish higher prices while sales activity might be lower, he adds.

Profit before tax in the year to 31 December increased 18.7%, from £220.3 million to £261.4 million, a little ahead of the consensus expectation of £255 million. This came on sales of £3.2 billion, 11.9% over 2006's £2.8 billion.

The dividend is up from 37.4p a share to 44.9p, higher by 20.1%. Travis Perkins shares added 14p to £10.84 giving the group a stock market value of over £1.3 billion.

Landsbanki analyst Simon Brown is a buyer of the shares, but says this year is going to be hard work.

While last year's revenue was flagged up in the December trading update, the profits were better than expected as the margins grew faster than forecast.

'The slowdown in housing is going to impact the group despite its expansion plans,' he said in a note. 'Like-for-likes may fall marginally in the first half, but this will be offset by core business branch expansion and continuing leverage from the existing 1,166 outlets.'

During the year the Travis Perkins group added 75 branches and expanded its range of brands with the acquisition of Tile Giant

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