- Full-year adjusted operating profit forecast at $2.85bn-$2.95bn
- Figure is 9 per cent higher than current consensus of $2.67bn
Heating and plumbing distributor Ferguson (FERG) upgraded its full-year adjusted operating profit forecast to around $2.9bn (£2.4bn) on the back of a 37 per cent uplift in third quarter (covering the three months to 30 April) operating profit.
While the US housing market is facing similar headwinds to the UK, as interest rates go up and homebuyers face steeper mortgage rates, Ferguson said demand from residential buyers "remained robust" in the period. Sales in this area were 20 per cent ahead of last year, although its non-residential arm in the country posted a 29 per cent increase.
Overall, the company saw revenue growth of 23 per cent to $7.28bn in the quarter, while good cost control drove the operating profit surge to $712mn. The full-year revised profit figure is about 9 per cent higher than the mid-point of the current consensus forecast of $2.67bn.
Ferguson recently moved its primary listing to the New York Stock Exchange, given that it earns all of its revenue in North America following last year’s sale of the Wolesley UK business to private equity firm Clayton, Dubilier & Rice for £308mn.
Ferguson’s shares are currently valued at about 12 times forecast earnings, which is lower than their five-year average of almost 17 times. RBC Capital Markets said it sees the valuation as “up with events given the uncertain macro outlook”. Although things look slightly brighter on the other side of the Atlantic, we agree and maintain our hold recommendation.
