Ferguson FY profit rises as US house market recovers

Plumbing and heating products supplier Ferguson on Tuesday posted a rise in annual profits and warned that it also expected a tapering in the second half of the current year on tougher comparatives.

The company, formerly known as Wolseley, posted a 46.4% rise in pre-tax profit to $1.89bn for the year to July 31, boosted by home improvement demand during the Covid-19 pandemic.

Revenue increased to a better-than-expected $22.79bn from $19.94bn, with fourth-quarter organic revenue up 24%.

Trading profit, which excludes exceptional and other one-off items, rose to $2.18bn from $1.66bn. The dividend was lifted 15% to 239.4 cents a share.

Ferguson, which is focused on North America, said US residential end markets were strong in the first half of the year and “saw a significant step up in the second half” as housing starts and permits continued to grow well.

Non-residential end markets were “more challenging” in the first half as commercial and industrial project work was subdued but returned to modest growth in the second half as the US economy re-opened and lapped relatively weaker comparators, the company added.

"The group started the new financial year with strong momentum, with organic revenue growth at similar levels to Q4 2020/21,” said chief executive Kevin Murphy.

“We expect a year of good growth overall but we anticipate a tapering in the second half on tougher prior year comparatives.”

Murphy added the company also expect operational improvements to broadly offset headwinds from cost inflation and was “mindful that the recent tailwinds from inflation on gross margins could moderate”.

Ferguson said it was on track for a shareholder vote to move its primary listing to the US next spring.

ENDS