Shares in Ferguson (FERG) fell by around 10 per cent after the world’s largest trade distributor of plumbing and heating products warned that organic growth in the second half of the year to July 2019 will be between 3 and 5 per cent, compared with 6.5 per cent in the first six months to January 2019. This means that profits for the full year will be at the lower end of analysts’ expectations.
First-half trading in the US, which accounts for 83 per cent of group turnover, remained favourable, and the group continued to increase its market share. Revenue grew by 9.7 per cent on an organic basis, with a further 3.2 per cent coming from 10 bolt-on acquisitions, although trading margins were a little lower at 7.9 per cent.
Trading in the UK saw virtually no revenue growth, while the company continued with a restructuring programme that trimmed trading profits by $8m (£6.1m) to $30m and margins to 2.5 per cent from 2.8 per cent. Trading was also tough in Canada, where residential markets slowed because of rising interest rates and restrictions on mortgage credit. Ferguson is also moving its headquarters to the UK from Switzerland, following changes in Swiss tax rules.
Analysts at Peel Hunt were forecasting adjusted pre-tax profits for the year to July 2019 of $1.55bn and EPS of 497.6¢, but these are shortly expected to be downgraded by around 2.5 per cent.
| FERGUSON (FERG) | ||||
| ORD PRICE: | 4,615p | MARKET VALUE: | £10.7bn | |
| TOUCH: | 4,615-4,617p | 12-MONTH HIGH: | 6,601p | LOW: 4,594p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 1,850p* | NET DEBT: | 44% | |
| Half-year to 31 Jan | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 10.03 | 598 | 176 | 57.4 |
| 2019 | 10.85 | 679 | 235 | 63.1 |
| % change | +8 | +14 | +33 | +10 |
| Ex-div: | 4 Apr | |||
| Payment: | 30 Apr | |||
| £1=$1.325 *Includes intangible assets of £2.1bn, or 893p a share | ||||
