Plumbing products firm Ferguson (FERG) gained 1.3% to £85.92 as it reported a rise in first-quarter profit and revenue, driven by strong growth in the US and Canada.
For the three months ended 31 October, trading profit rose 11.8% to $504 million year-on-year as revenue climbed 3.1% to $5.4 billion. The US business generated revenue growth of 3.2%, and Canada generated growth of 2.2%.
The company has benefitted from a relaxation in coronavirus curbs across the Atlantic as Americans who have been stuck indoors target home improvements and as new housing permits tick up.
With Covid cases surging again this positive trend could go into reverse and the company also acknowledges it has faced a more challenging backdrop in its industrial business.
‘ELEPHANT IN THE ROOM’
Ferguson noted that since the start of the second quarter it had continued to generate low single-digit revenue growth in broadly flat markets, although it remained cautious on the outlook citing the pandemic.
‘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 FY 2021 are unchanged,’ it added.
Peel Hunt noted before today’s update: ‘The elephant in the room remains the demerger of the UK business and the US listing. Recent trade press articles have suggested that the UK business will be exited via a trade sale or sale of private equity, with a demerger now largely ruled out. We expect Ferguson to continue its journey towards a sole US listing over the next 12-18 months.’
This restructuring effort is yet to be finalised according to Ferguson with its plans thrown off course by the coronavirus crisis.
