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Annual Results

Ferguson buoyed by favourable US markets

03 October 2017 07:07

Ferguson has reported 'a good set of results' were driven by favourable US residential and commercial markets, which account for the majority of its revenue.

Industrial markets, which account for 7% of US revenue, were weak in the first half but recovered well in the second half.

In the UK, the heating market remained pretty weak. In Canada markets improved progressively through the year. Revenue in the ongoing businesses totalled £14,878 million (2016: £12,146 million) - 6.0% up on a like-for-like basis with a further 2.1% of growth from acquisitions, 0.4% from one additional trading day and 0.1% from new branches.

Gross margins were 40 basis points ahead as the group continued to focus on a better mix of higher value-added products and services and improving its procurement.

Operating expenses in the ongoing businesses were 10.1% higher at constant exchange rates, with increased headcount costs, further investment in the business and 2.6% from acquisitions.

Trading profit in the ongoing businesses was £1,032 million (2016: £827 million), 8.7% ahead of last year at constant exchange rates.

The trading margin in the ongoing businesses was 10 basis points ahead of last year at 6.9%.

The additional trading day increased trading profit by about £9 million. Foreign exchange rate movements increased revenue by £1,550 million and trading profit by £122 million.

Trading profit from the non-ongoing businesses was £27 million (2016: £30 million).

Trading profit from continuing operations was £1,059 million (2016: £857 million).

Trading profit from discontinued operations was £63 million (2016: £59 million).

Statutory pre-tax profit rose to £1,180 million (2016: £675 million).

Headline earnings per share were 288.9 pence (2016: 234.7 pence) an increase of 23.1%, reflecting the growth in trading profit and benefit from movements in foreign exchange rates.

Statutory basic earnings per share from continuing operations were 353.4 pence (2016: 183.4 pence).

Group chief executive John Martin said: 'I am delighted to report another good year for the Group, in which ongoing trading profit increased to £1,032 million.

'In the USA, Blended Branches, Waterworks, B2C e-commerce, HVAC, Fire and Fabrication and Facilities Supply generated good growth and gained market share and Industrial revenues recovered in the second half. 'In line with our strategy to generate the best profitable growth in the USA we continued to invest in the further development of our service offerings including the next generation of our e-commerce platforms, expanding our fleet and logistics capabilities and developing adjacent business opportunities.

'Given our strong financial position, which includes proceeds from recent disposals, we are initiating a £500 million share buyback programme which we expect to complete over the next 12 months.

'The Group will continue to target net debt in the range of 1x to 2x EBITDA, consistent with investment grade credit metrics.

'US markets continue to be favourable, in particular residential and commercial markets where we generate the majority of our revenue.

'Organic revenue growth3 in the new financial year has been about 6%.

'Our business is performing well, we have a strong balance sheet to support our plans and the Board continues to look to the medium-term with confidence.'

Story provided by StockMarketWire.com

Related Company: FERG

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