Newswatch: Building profits from housing.
Travis Perkins is just the kind of company that will be hit if the chancellor uses his Budget to boost the government’s countryside credentials by imposing VAT on new build housing. The company may not be a developer – its business is supplying timber, building materials and tool hire to the industry – but it will share any pain felt by its clients. With FD Paul Hampden Smith closely involved, the company has been on a buying spree over the past six months. Earlier this month Travis, the UK’s third largest builders’ merchant before it began shopping, acquired Cumbria-based builders merchant Broombys. In January it bought Allied Builders Merchants while a month before that it picked up Baseline Builders Merchants in Devon. But it was last June’s purchase of Keyline, the country’s fifth biggest merchant, that counts as the company’s most significant deal. The all cash deal valued Keyline at £181.5m. And, as a result of the purchase, Travis quickly became the second largest merchant in the UK, with combined sales last year of £932m and an estimated 11% market share. Announcing a 32% rise in pre-tax interim profits last September, company chairman Tony Travis said he was encouraged about the company’s outlook because of a rise in new housing starts. If VAT is imposed on new housing later this month, it could put paid to that.