UPDATE: Travis Perkins Earnings Beat Views; Pledges Dividend

2nd Jul 2010 07:50

(Adds detail.) By Lilly Vitorovich Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. building-materials retailer Travis Perkins PLC (TPK.LN) said Friday that its first-half results are ahead of management expectations, underpinned by the strong rebound in trading, and that it intends to resume dividend payments. "Given our pleasing trading performance in the first half we now anticipate recommencing the payment of dividends although initially we will be basing this off a conservative level of cover," the company said in a statement. In the absence of unforeseen circumstances, the company said it expects to declare an interim dividend of 5 pence per share when it announces its interim results July 29. "Our objective is to grow the dividend ahead of earnings to reduce the current level of cover over the medium term," it said. The company had suspended dividend payments early last year when it was squeezed by a slump in the construction and property sector. In May 2009, it raised GBP300 million in a rights issue to cut its debt and to provide financial flexibility. For the six months to June 30, group revenue was up 4.7% from the same period a year earlier. Like-for-like sales rose 3.4%. In May and June, like-for-like revenues in merchanting and retail were up 10% and 1.6%, respectively. Travis Perkins also expects to update the market shortly on its takeover talks with specialist distributor BSS Group PLC (BTSM.LN), Chief Executive Geoff Cooper said. The company in May announced it was in advanced talks to buy BSS for more than GBP553 million. The offer comprises 232.91 pence in cash, 0.2608 new Travis Perkins shares per BSS Group share and the BSS dividend of 6.09 pence per share. Travis Perkins also is offering a mix-and-match facility so that shareholders can indicate whether they would prefer more equity or more cash. The enlarged group would create a plumbing and heating trade and retail distribution business in the U.K., with operational and financial size and scale to purchase products more competitively and secure the benefits of global sourcing. Travis Perkins shares closed Thursday at 709 pence on the London Stock Exchange, giving the company market capitalization of GBP1.48 billion. The stock has lost 17% in value since the start of 2010. -By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; [email protected] (END) Dow Jones Newswires July 02, 2010 02:50 ET (06:50 GMT)