Ferguson overcomes ‘tough’ UK trading to notch up 15% profits hike
Plumbing supplier Ferguson has cheered a 15% hike in annual profits as another strong performance in its US business offset “tough” UK trading.
The group, formerly known as Wolseley, reported trading profits of 1.5 billion US dollars (£1.2 billion) for the year to July 31, up 15.3% or 14.7% higher with currency movements stripped out.
Trading profits in its US business, which now accounts for 90% of earnings, jumped 16.8% higher to 1.4 billion US dollars (£1.1 billion).
But UK trading profits tumbled 28.8% to 73 million US dollars (£56 million) in a “challenging” market and as it continues to restructure the division.
It said UK like-for-like revenues rose 0.7%, but this was boosted by price inflation of about 3% following the collapse of the pound since the vote to quit the EU.
Ferguson has been overhauling its UK arm, axing branches and quitting unprofitable wholesale business in an attempt to turn around trading.
It said the actions had affected trading performance in the short term, but added that it was “confident that they will help us build a better business going forward”.
Group chief executive John Martin said: “Markets in the US 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.”
He added: “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.”
On a statutory basis, full-year pre-tax profits fell to 1.19 billion US dollars (£915 million) from 1.42 billion US dollars (£1.09 billion) the previous year.
The UK now accounts for just 5% of group trading profit.
The group changed its name from Wolseley in July last year as part of efforts to focus more on the US, where it makes the bulk of its revenue and trades as Ferguson.
But the Wolseley name has been retained in the UK, replacing previous brands such as Plumb Center.
Shares in the group fell 5% after its results, though analysts put the fall down to profit-taking after the stock has surged by a third over the past year thanks to its stellar performance in the US.
Richard Hunter, head of markets at interactive investor, said: “The group has a large exposure to a US economy which is truly firing on all cylinders, so the fact that 90% of its trading profit emanates from the region turbocharges the numbers.”
