Ferguson: Quarterly Revenue up 6.2%

Ferguson, owner of Wolseley UK - which rebranded its specialist Plumb, Parts, Drain, Pipe and Climate Center brands under the single Wolseley banner, last year - has advised of continued growth in its quarterly trading update, covering the three months ended 30th April.

Third Quarter Highlights

−          Ongoing revenue growth of 6.2%, including 8.4% in the USA.
−          Solid gross margins, slightly ahead of last year.
−          Good cost control, underlying operating costs lower than in Q2.
−          Ongoing trading profit of $359 million was $8 million ahead of last year.
−          Strong operating cash generation of $632 million in the quarter with net debt to EBITDA of 0.9x.
−          Share buy back of $500 million announced today.

John Martin, Group Chief Executive, commented:

"The Group continued to grow in Q3 with revenue 6.2% ahead. We also continued to successfully grow our gross margins and have improved our underlying cost base over the last two quarters. 

"We are confident that Ferguson will continue to make progress as we remain firmly focused on delivering superior customer service. We expect to generate ongoing Group trading profit in the year ended 31 July 2019 in line with current analysts' consensus forecasts. 

"Cash generation continued to be excellent and our balance sheet remains strong. We will continue to invest organically in our businesses supplemented by bolt-on acquisitions in our core operations. Given our strong financial position, and in line with our capital allocation policy, we are initiating a $500 million share buy back programme which we expect to complete over the next 12 months."

Group results

Revenue in the quarter was $5,274 million, 6.2% ahead of last year and 2.7% ahead on an organic basis. Gross margins continued to improve, up 20 basis points to 29.5% and operating costs were well controlled. Trading profit of $359 million was $8 million ahead of last year. There were the same number of trading days as in Q3 last year and exceptional costs were $18 million in the quarter.

Three months to 30 April by region

UK

Like-for-like revenue growth was 2.8% in the quarter. Gross margins were lower but costs were well controlled. Trading profit of $20 million was flat at constant currency but $2 million lower than last year due to adverse foreign exchange rate movements.

Outlook

We are confident that Ferguson will continue to make progress as we remain firmly focused on delivering superior customer service. We expect to generate ongoing Group trading profit in the year ended 31 July 2019 in line with current analysts' consensus forecasts.

Source : Insight DIY Team and Ferguson

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