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Travis Perkins passes on cost inflation to trades

Travis Perkins increased its returns in Q3 by passing higher material prices onto its trade customers, according to a trading update released this morning.

Sales price inflation in the third quarter was up 1.9 per cent compared with the same period in 2017, down from the 3 per cent reported in the second quarter.

The reduction was primarily due to the company passing on more price rises to its trade customers, the company said.

In spite of the higher prices, Travis Perkins reported sales for its merchant trade businesses were up 7 per cent compared with Q3 last year.

Plumbing and heating supplies saw the greatest pick-up, with sales rising 10.4 per cent.

Its general merchant business saw more subdued growth at 0.9 per cent.

Travis Perkins’ consumer business, which includes Wickes, has struggled in the face of lower consumer confidence and been forced to absorb more material cost increases.

The company’s share price has slid 35 per cent since the start of the year on the back of economic and political uncertainty.

Chief executive John Carter said today the company was making “good progress” in cutting costs and that it was on course to report full-year results in line with expectations.

Analysts have forecast earnings before interest, tax and amortisation of £363m on revenue of around £6.71bn.

Last week Turner & Townsend reported contractors were expecting material costs to increase by 5.3 per cent over the next year.

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