IN Brief:
- First-half revenue fell 1.8% to £2.258bn, while adjusted operating profit rose 6.3% to £67m.
- General Merchant margin improved through price recovery, sales mix, and procurement gains.
- Net cash before leases reached £55m, giving the group greater flexibility during weak demand.
Travis Perkins reported early progress rebuilding profitability during a subdued first half, with improved performance in general merchanting offsetting lower group revenue. Sales for the six months to 30 June 2026 fell by 1.8% to £2.258bn, while adjusted operating profit increased by 6.3% to £67m.
Excluding property profits, adjusted operating profit was unchanged at £62m. Statutory operating profit rose by 10.2% to £65m, while profit after tax increased by 15.4% to £30m, giving the group a firmer earnings result despite continued weakness across parts of the construction market.
The company said its General Merchant business improved margin through the recovery of supplier price increases, a more favourable sales mix, and procurement benefits. Toolstation UK increased revenue, margin, and return on capital, although the group’s Benelux operation remained difficult.
Specialist merchanting businesses were described as resilient, with demand connected to infrastructure performing better than new-build construction. That division reflects a wider market in which repair, maintenance, utilities, and infrastructure workloads have offered greater stability than residential and commercial development.
Price recovery supports merchant margins
Merchant profitability depends partly on how quickly supplier increases can be reflected in customer prices. Delays create a margin squeeze because replacement stock enters the network at a higher cost before equivalent increases have worked through branch quotations and account agreements.
Travis Perkins said it had passed manufacturer price increases through the business during the period. Some oil-derived plastic products experienced increases of between 15% and 20%, showing that lower general inflation does not prevent individual construction-material categories from moving sharply when feedstock, energy, freight, or manufacturing costs change.
The result follows earlier warnings that building-material inflation was returning across selected product groups. The half-year figures indicate that the merchant has so far protected margin more effectively than during previous cost shocks, although price recovery still depends on competitive conditions and customers’ willingness to accept higher quotations.
That negotiation becomes more difficult when demand is weak. Contractors facing limited tender pipelines are under pressure to reduce project costs, while merchants must avoid sacrificing margin simply to maintain volume. The resulting tension can produce shorter quotation periods, product substitutions, smaller order releases, and more frequent repricing as projects move between pre-construction and site delivery.
The group’s revenue decline also underlines the absence of a broad construction recovery. Improving merchant efficiency can strengthen profit without indicating that customers are buying materially greater volumes. Travis Perkins expects the second half to remain similarly subdued, leaving internal execution rather than market growth to carry much of the near-term improvement.
Its balance sheet provides more room to manage that environment. Net cash before leases stood at £55m at the end of the period, compared with net debt of £103m a year earlier. Net debt to earnings before interest, tax, depreciation, and amortisation improved from 2.3 times to 1.9 times.
Stronger cash generation can support branch investment, stock availability, technology, fleet renewal, and selective operational changes without adding financial pressure during a weak market. It also gives management more flexibility to prepare for recovery, although investing too early in an uncertain cycle carries its own cost.
The interim dividend was reduced by 11.1% to 4p per share, showing that the company is still balancing shareholder returns against the need to preserve financial capacity. The earnings improvement is therefore better viewed as stabilisation than as evidence that either the turnaround or the construction cycle is complete.
Toolstation UK provides a different operational signal. Its combination of branch, online, and collection services gives the group exposure to smaller contractors, maintenance work, and project purchases that do not depend solely on large new-build starts. Improving returns in that business can partially offset weakness elsewhere, but it cannot entirely replace the volumes generated by a sustained housing and commercial market.
General merchanting remains closely tied to the pace at which projects move from planning and tendering into physical delivery. A delayed housing site, school, industrial unit, or commercial refurbishment removes demand across timber, insulation, drainage, heavyside materials, fixings, tools, and finishing products, with the effect spread across numerous branches and suppliers.
Travis Perkins enters the second half with improved margins and a stronger cash position, but without a dependable market tailwind. Its first-half result shows that operational changes can protect profit during weak trading; the next test is whether that discipline holds if volumes remain subdued and another round of supplier increases reaches contractor quotations.