Demand for heating and plumbing products remained brisk in the US, which is where Ferguson (FERG) generated 90 per cent of group trading profits in the year to July. However, group profits would have been lower when taking out a $439m (£338m) gain on the disposal of its Nordics business, the proceeds from which were returned to shareholders through a special dividend.
Organic growth in the US was just under 10 per cent, with acquisitions contributing a further 1.4 per cent, and all four geographic regions recorded growth as well as gaining market share. And despite labour cost inflation of 3-4 per cent, improvements in procurement and pricing meant that trading margins improved from 8.0 per cent to 8.4 per cent.
Nine acquisitions were made in the US in the year and another four after the year end, generating revenue of $514m. Further investment was made in the group’s trading platforms, and e-commerce now accounts for nearly a quarter of US revenue.
Canada and central Europe account for 5 per cent of group trading profit, and delivered organic growth of 6.9 per cent, with a further 2.5 per cent coming from acquisitions, which meant that trading profits jumped by nearly a half to $83m, including a $6m one-off gain and $3m from exchange rate movements. Trading margins rose from 4.3 per cent to 5.5 per cent. Four acquisitions were made during the year and one after, while the group intends to dispose of Wasco, its one remaining business in central Europe.
Trading in the UK (5 per cent of group turnover) was a lot tougher, with branch closures leaving organic revenue down by 5.3 per cent. Trading profits slid from $96m to $73m, with margins down from 3.8 per cent to 2.8 per cent. There is an ongoing restructuring programme, although the financial performance is unlikely to show any improvement until this is completed.
| FERGUSON (FERG) | ||||
| ORD PRICE: | 6,213p | MARKET VALUE: | £14.4bn | |
| TOUCH: | 6,211-6,214p | 12-MONTH HIGH: | 6,601p | LOW: 4,851p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 1,751p** | NET DEBT: | 27% | |
| Year to 31 Jul | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 12.3 | 0.68 | 182 | 82.5 |
| 2015 | 13.3 | 0.51 | 124 | 90.8 |
| 2016 (restated) | 12.5 | 0.68 | 183 | 100 |
| ($bn) | ($bn) | (¢) | (¢) | |
| 2017 (restated) | 19.3 | 1.42 | 419 | 156.4 |
| 2018 | 20.8 | 1.19 | 342 | 189.3* |
| % change | +8 | -17 | -18 | +21 |
| Ex-div: | 25 Oct | |||
| Payment: | 05 Dec | |||
| £1=$1.3 *Not including 400¢ special dividend paid in June **Including intangible assets of $1.72bn or 740¢ per share | ||||
