Travis Perkins, the builders merchants and Wickes owner, has decided to start paying a dividend again after better than expected recent trading.
The company said it believed its half year results would now be ahead of its original forecasts, following a strong rebound after a slow start to the year. Like for like sales in the six months were up 3.4% overall, 10.3% better in merchanting and 1.6% higher in retail.
It intends paying a 5p a share interim dividend, barring unforeseen circumstances, and will give an update on talks with plumbing and heating company BSS shortly. Last month Travis said it would offer £553m for BSS. The company's shares have climbed 36p to 745p, but analyst Paul Checketts at Oriel Securities maintained his reduce rating:
Travis has had a cracking past two months of trading in its merchanting division that is likely to see full year numbers edge up and seems to have convinced management to re-introduce the dividend. Wickes is continuing to gain market share but the comparatives are now more challenging.
It's all good news today. We're cautious on the outlook for construction in the UK in the coming years though. On upgraded 2010 earnings per share of 74p the shares are trading on 9.5 times. With the potential for a demand shock in the future we moved to a reduce at the start of this week.
