Plumbing firm Ferguson says UK spin-off is on track
Plumbing giant Ferguson has said the demerger of its UK arm Wolseley is firmly on track as the company posted higher profits in the first quarter.
The company reported a 9% jump in profit to 451 million US dollars (£347 million), as it was buoyed by its “outperforming” US business.
Ferguson said its total revenues rose by 5.3% to 5.21 billion dollars (£4 billion) for the three months to October 31, as the company hailed a “good overall trading performance”.
It said that this was driven by its core US business which saw its sales rise by 6.2% to 4.89 billion dollars (£3.7 billion) amid an increase in residential housing activity in the country.
The UK Wolseley business – which it said it will be completely demerged next year – saw sales drop 2.2% to 541 million dollars (£416 million) for the period.
In September, Ferguson announced plans to split off the UK operations following a lengthy strategic review of the group.
It said that UK organic revenue slipped 4.2% in the quarter due to a “backdrop of uncertainty” in the repair, maintenance and improvement markets.
Ferguson added that its trading profit of 15 million dollars (£11.5 million) in the UK was three million dollars (£2.3 million) lower than for the same period last year.
The company added that it continues to manage its UK cost base because of the “challenging environment” and suffered a five million dollar (£3.8 million) one-off cost due to the closure of its Worcester distribution centre and related job losses.
Kevin Murphy, chief executive of the Ferguson group, said: “Ferguson continued to take market share against a backdrop of flat US markets and we remain firmly focused on maximising organic revenue growth, while tightly managing gross margins and costs.
“Cash generation in the quarter was good and our balance sheet remains strong.
“We will continue to invest organically in our businesses and in selective bolt-on acquisitions which will be integrated into our network.”