UPDATE 2-UK's Travis Perkins urges govt help for construction

Thu Jul 26, 2012 6:30am EDT

* H1 underlying pretax profit 137 mln stg, up 7.3 pct

* H1 revenue 2.41 bln stg, up 2.7 pct

* Interim dividend 8 pence, up 23 pct

* Says happy with FY consensus forecasts

* Shares up 0.2 pct

By James Davey

LONDON, July 26 (Reuters) - Travis Perkins, Britain's largest distributor of building materials, urged the government to do more to boost activity in construction and help kick start the country's recession-hit economy.

The British government is under pressure to boost growth after data on Wednesday showed the economy shrank far more than expected in the second quarter, battered by everything from an extra public holiday to the euro zone crisis.

Travis Perkins Chief Executive Geoff Cooper on Thursday welcomed last week's government initiative to stand behind up to 40 billion pounds ($62 billion) worth of stalled infrastructure projects struggling for funding.

But he said the government should be doing more, given that construction accounts for nearly 10 percent of Britain's gross domestic product, by spending money on shovel-ready projects that would have a big multiplier effect on the overall economy.

"What we would wish the government to do is stop spending bad money on current expenditure (waste and inefficiencies) and spend good money on capital items," Cooper told Reuters.

"They've done a few things but I think we would want to press them even harder to go further in that direction."

The CEO said latent demand in the firm's markets was increasing because many projects were being scaled back or deferred until lead indicators showed that prospects were improving.

Shares in Travis Perkins rose 0.2 percent after the firm posted a 7.3 percent rise in half year profit, though the outcome was held back by record rainfall in the April-June period which disrupted activity at building sites, costing it 10 million pounds ($15.5 million) of profit.

The 1,887-branch group, also a home improvement retailer, made an underlying pretax profit of 137 million pounds in the six months to June 30 on revenue up 2.7 percent to 2.41 billion pounds.

Sales at branches open over a year fell 0.7 percent and were down 2.7 percent in July.

But the firm has continued to grow gross margin and gain like-for-like market share in all of its four divisions -- general merchanting, specialist merchanting, plumbing and heating, and consumer -- and manage costs tightly.

Travis Perkins, which also trades as City Plumbing, Keyline, Tile Giant, Wickes and BSS, raised its interim dividend 23 percent to 8 pence and said it was confident of outperforming its overall market for the rest of the year and happy with full year consensus expectations.

Though both construction and consumer markets have been weak in the economic downturn Travis Perkins has performed relatively well, winning share from rivals and benefiting from the purchase of plumbing and heating specialist BSS in 2010 and of Toolstation in January this year.

Its shares, up 12 percent over the last six months, were up 1 pence at 979 pence at 0926 GMT, valuing the business at about 2.4 billion pounds.

"The share price has done well year to date but has drifted off its years' high, which a solid set of results should reverse," said Panmure Gordon analyst Andy Brown.

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