Travis Perkins hiked its profit forecast on Tuesday despite a major rise in costs in the past three months.
The business said that it believes adjusted operating profit will reach at least £310 million, an update of £10 million from previous guidance.
Yet shareholders were less than impressed. Most of the gain came from better than expected profits from Travis Perkins’ property portfolio.
And although operating profit had risen 14% in the first six months of the year, it was still below the £165 million that analysts at Liberum had forecast, so did not come as a pleasant surprise to investors.
Shares had dipped by around 1.5% on Tuesday morning.
The business said it had to contend with costs rising heavily over the period. In the past three months, price inflation hit 7%.
Travis Perkins said that this pressure is likely to continue in the near term and added there are shortages in timber and plasterboard.
Revenue grew 41% on a like-for-like basis, and the company swung from a £94.5 million loss to a £145.7 million profit before tax.
It was a period characterised by shrinking the business. Travis Perkins got out of the retail space when it listed Wickes as a separate business in April.
A month later the company sold its plumbing and heating business to private equity company HIG Capital for £325 million. The proceeds from this sale will be passed on to shareholders, Travis Perkins said.
It has led to a smaller business. Although revenue has been rising at the parts of the company that Travis Perkins still owns, the sales reduced a £2.8 billion revenue business to £2.3 billion.
Chief executive Nick Roberts said: “Our businesses have continued to play a critical role in the construction sector’s ongoing recovery and, while some uncertainty still remains, the end markets for our trade-focused businesses remain robust.
“As a result, I am cautiously optimistic around the outlook for the business and confident in our ability to make further progress in the second half of the year.
“We look forward to updating shareholders on our future plans in September.”
