Ferguson boosts revenue and profit but UK outlook remains ‘tough’ for Wolseley plumbing brand
Ferguson managed to report climbing revenue and profit today despite taking a hit in the UK, where it trades as plumbing firm Wolseley.
The figures
Revenue grew 7.6 per cent year on year to $20.7bn (£15.9bn) in the year to the end of July, while trading profit increased almost 15 per cent to $1.5bn.
Its final dividend payment of 131.9 cents brings its total dividend this year to 189.3 cents per share, 21 per cent higher than last year.
Why it’s interesting
While Ferguson managed to grow its trading profit margin on last year, 90 per cent of that came from its swelling US business, with 38 per cent growth in its Canada earnings to contribute a chunk of it too.
In contrast, trading profits in the UK took a 29 per cent hit to fall to $73m, the firm said, even including a $6m benefit from forex swings, calling the UK one of its “challenging markets” as it seeks to restructure its business there.
As such, Wolseley contributed just five per cent of Ferguson’s headline profit, while like-for-like revenue was up less than one per cent. Accounting for closed branches and Ferguson exiting low margin wholesale business, UK revenue was down 5.3 per cent.
Shares fell by almost five per cent in early morning trading.
“We continued to implement the restructuring programme and in March we appointed Mark Higson to lead the business,” Ferguson said, claiming to have made good progress in reconfiguring its logistics and supply chain and slashing its branch network and distribution centre capacity.
“Whilst trading performance was disappointing, some of the restructuring actions have been a headwind to our financial performance this year and we are confident that they will help us build a better business going forward.”
The restructure has cost it $72m in redundancy costs, property closures, asset write offs and implementation costs.
What Ferguson said
John Martin, group chief executive, said:
"Markets in the USA and Canada have remained good throughout the year despite recent inflationary pressures, though the UK remains tough.
"We continue to execute our strategy to allocate resources to markets and businesses where we are best equipped to win. Our focus remains on investing in organic growth, supplemented by selective bolt-on acquisitions where we can expand our leadership positions or invest in capabilities to extend the value of our brand.
"In the first eight weeks of our new financial year organic revenue growth has been broadly in line with the overall growth rate last year, though growth in September was slightly lower than August. The growth in our order books suggests continued growth in the months ahead."