Plumbing firm Ferguson sees shares soar on profit boost
The group, formerly Wolseley, saw annual pre-tax profits soar 75% to £1.2 billion thanks to strong growth from its revamped US operation.
Plumbing supplier Ferguson has cheered surging profits and seen its stock price jump after rewarding investors with a £500 million share buyback.
The group, formerly Wolseley, saw annual pre-tax profits soar 75% to £1.2 billion, thanks to strong growth from its revamped US operation.
Revenues were up 17% to £17.3 billion, with £2.1 billion coming in part from its move to pull out of the Nordic regions.
The group also hiked the dividend 10% to 110p, sending shares up 3% and making the firm the biggest riser on the FTSE 100 Index.
Group chief executive John Martin said the US arm had taken market share and secured “good growth”, leaving the group “well placed” to push ahead next year.
He said: “Given our strong financial position, which includes proceeds from recent disposals, we are initiating a £500 million share buyback programme which we expect to complete over the next 12 months.
“US markets continue to be favourable, in particular residential and commercial markets where we generate the majority of our revenue.
“Our business is performing well, we have a strong balance sheet to support our plans and the board continues to look to the medium-term with confidence.”
Stripping out the impact of exchange rates, US revenues rose 10% to £11.8 billion over the period, with online sales counting for 22%, or £2.6 billion.
UK revenues also rose by a more modest 1% to £2 billion following growth in new housing markets.
Focusing on like-for-like growth, the US expanded by 7% and the UK grew by 1%.
Russ Mould, AJ Bell investment director, welcomed the group’s bright performance, but flagged areas of concern.
He said: “While it is encouraging to see the US show improved momentum in the second half of the year, it is of some concern to see a marked slowdown in US new housing starts and US new homes sales, even if Ferguson’s business across the pond has a broad spread between residential, commercial and industrial buildings.”
He also questioned whether a “patchy” UK performance could see the operation being put up for sale.
Ferguson, which has 1.1 million customers, shelled out £292 million on 11 bolt-on acquisitions during the financial year and made £186 million on the sale of fasteners firm Endries.