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Ferguson Q1 profits, revenue up on cautious outlook for 2021
8th Dec 2020 07:02
(Sharecast News) - Plumbing and heating products supplier Ferguson reported a rise in first quarter core earnings and revenue driven by a strong performance in the US and Canada as home improvements increased with the lifting of Covid-19 curbs.
The company, formerly known as Wolseley, said adjusted core earnings rose 2.7% to $558m (£418m) on revenue of $5.3bn (£4.1bn), a gain of 3.1%. The figure excludes UK results as Ferguson plans to demerge its Wolseley operations.
Underlying trading profit rose to $486m in the three months to October 31 from $433m. Trading profit grew by nearly 12% to $504m over the period, as its markets in both the US and Canada showed a resilient set of results.
"Since the start of the second quarter Ferguson has continued to generate low single digit revenue growth in broadly flat markets although we remain cautious on the outlook for the year as a whole, considering current pandemic trends," said chief executive Kevin Murphy..
"Despite these potential headwinds the business is in very good shape and we are well prepared should there be any further market related disruption and overall management's expectations for 2021 are unchanged."
Profits were driven by higher demand for home improvement in the US after the easing of coronavirus curbs led to a rise in new housing permits. However, it did flag challenges for its commercial business with restricted municipal funding and a tougher manufacturing environment for industrial clients.
The company repeated its position from September that it was assessing other options in parallel with current plans to demerge its Wolseley UK business.
Richard Hunter, head of markets at interactive investor, said the previously announced dividend payment, which leaves the yield at around 2.5%, "is a further sign of confidence and that the group has weathered the economic pandemic challenges which came its way".
"With US revenues improving in the quarter by 3.2% and underlying trading profit by 11.3%, Ferguson has demonstrated that its previous controls on operating and capital expenditure have borne fruit."
"At the same time, the online offering continued to provide insurance at group level to differing purchasing habits, while net debt remains firmly under control despite the cost of the two acquisitions."
Hunter said Ferguson shares had added 107% since the March lows at the height of pandemic lockdowns nd over the last year are ahead by 27%, as compared to a decline of 9% for the wider FTSE100.
"With the group continuing to benefit from the actions it has taken and being underpinned by a robust financial position, the market consensus of the shares has recently nudged higher and now stands at a 'buy', based on future prospects."
The company, formerly known as Wolseley, said adjusted core earnings rose 2.7% to $558m (£418m) on revenue of $5.3bn (£4.1bn), a gain of 3.1%. The figure excludes UK results as Ferguson plans to demerge its Wolseley operations.
Underlying trading profit rose to $486m in the three months to October 31 from $433m. Trading profit grew by nearly 12% to $504m over the period, as its markets in both the US and Canada showed a resilient set of results.
"Since the start of the second quarter Ferguson has continued to generate low single digit revenue growth in broadly flat markets although we remain cautious on the outlook for the year as a whole, considering current pandemic trends," said chief executive Kevin Murphy..
"Despite these potential headwinds the business is in very good shape and we are well prepared should there be any further market related disruption and overall management's expectations for 2021 are unchanged."
Profits were driven by higher demand for home improvement in the US after the easing of coronavirus curbs led to a rise in new housing permits. However, it did flag challenges for its commercial business with restricted municipal funding and a tougher manufacturing environment for industrial clients.
The company repeated its position from September that it was assessing other options in parallel with current plans to demerge its Wolseley UK business.
Richard Hunter, head of markets at interactive investor, said the previously announced dividend payment, which leaves the yield at around 2.5%, "is a further sign of confidence and that the group has weathered the economic pandemic challenges which came its way".
"With US revenues improving in the quarter by 3.2% and underlying trading profit by 11.3%, Ferguson has demonstrated that its previous controls on operating and capital expenditure have borne fruit."
"At the same time, the online offering continued to provide insurance at group level to differing purchasing habits, while net debt remains firmly under control despite the cost of the two acquisitions."
Hunter said Ferguson shares had added 107% since the March lows at the height of pandemic lockdowns nd over the last year are ahead by 27%, as compared to a decline of 9% for the wider FTSE100.
"With the group continuing to benefit from the actions it has taken and being underpinned by a robust financial position, the market consensus of the shares has recently nudged higher and now stands at a 'buy', based on future prospects."