Travis Perkins (LSE:TPK) shares climbed 5.6% to 616.5p after the building materials distributor reported a decline in full-year profits due to weak construction activity and the rollout of a new IT system, though a strengthening of its balance sheet gave management confidence that the worst is behind it.
Adjusted operating profit for 2025 fell 12.5% to £133 million, as lower trading volumes and heavier promotional activity in its core Merchanting division saw revenue slip 0.9% to £4.6 billion and wiped £32 million from gross profit.
Like-for-like revenue grew 0.3%, with the FTSE 250 group hailing a "sharper competitive proposition" in the second half, after getting over operational challenges at the start of the year.
Toolstation UK was the standout performer, with adjusted operating profit jumping 29% to £44 million as the store estate matured and continued to take market share.
The full-year dividend was cut to 12p per share from 14.5p, which is in line with the group's policy of paying out 30-40% of adjusted earnings.
The balance sheet told an encouraging story too, with net debt before leases swinging to a small net cash position – of £1 million – for the first time in nearly 30 years.
New chief executive Gavin Slark, who joined on 1 January from SIG, said he was "immediately impressed" with the energy across the business and expressed confidence in restoring performance and creating "significant shareholder value over the medium term."
With trading since the start of 2026 having remained subdued amidst continued weakness in UK construction activity, he said the group will focus on improving its customer proposition, leveraging its financial position and finding more operational efficiencies "in readiness for when market conditions recover".
Broker Peel Hunt said the results "were largely as expected".
Analysts Stifel said: "In the absence of a firm outlook statement, we would expect consensus to weaken on this announcement, probably by at least 5%."
Analysts added: "While we agree with the premise that Travis Perkins has significant scope for improvement and that Mr Slark is eminently qualified to deliver this, we will wait for a better entry point while the market appears at risk of overestimating the speed of recovery."
** UPDATE: Adds share price and broker comments **