Building materials specialist received huge currency boost on US sales following Brexit
Companies: Ferguson Enterprises Inc.
International building materials provider Wolseley is to change its name to Ferguson Plc and exit the Nordic region it announced on Tuesday after bumper US sales helped the FTSE 100 firm report a big rise in first-half trading profits.
Revenue came in 24.5% ahead of the previous year at £8.46bn, with a sizeable currency tailwind boosting results. On a constant currency basis, revenue rose a more modest 6.7% with like-for-like growth of 3.2%.
US revenue grew at 10% at constant currency exchange rates, with US residential and commercial markets performing well and industrial markets improving. Its US business Ferguson has grown to comprise 84% of group profit, and today the company also announced it was changing its name to Ferguson Plc to reflect the growing dominance of its US operation.
Meanwhile, in the UK the business' transformation programme is on plan and trading "held up well" in the first half, but business is not so good in the Nordics with the Group saying it is to exit the region:
"We have concluded our review of the Nordic operating strategy and identified a clear and executable plan to return the business to profitable growth. However, there are few synergies with the rest of the Group’s plumbing and heating businesses and we have initiated a process to exit our business in the region."
Changes in Forex rates after Brexit increased revenue by a whopping £1.13bn which, with a gross margin of 28.6%, led to a 5% increase in profit Yoy at £515m. Commodity deflation in the US dampened trading profit by £17m. The results also show decent ecommerce sales growth which hit £1.4bn and now contributes 17% of sales.
As a result of the stellar performance, the company said it was raising its interim dividend by 10% to 36.67p, payable on 28 April with an ex-div date of 6 April and a record date of the 7th.
CEO John Martin said the company had continued to execute its strategy of investing in profitable growth and expansion where appropriate and keeping tight control of its cost base. He added that he expected the Group to make further progress in the second half of the year.
Shares in Wolseley jumped nearly 8% on Tuesday, adding to the 42% share price gains the firm has made since Brexit on 23 June.
