Ferguson shares heat up after annual results

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Ferguson shares heat up after annual results
Master Investor Magazine

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FTSE 100 plumbing and heating parts firm Ferguson (LON:FERG) saw its share price rise by 4.71% to 6,224p (as of 13:15 BST) as revenues for the year ended 31st July rose by 6.1%. Profits before taxation climbed by 11.5% and the total ordinary dividend was increased by 10%.

CEO John Martin commented: “Ferguson performed strongly in 2019 with organic growth in the US of 6.2% and substantial investments in acquisitions to further consolidate our market leading positions. Markets weakened in the second half but our well-executed approach to expanding gross margins and decisive cost control measures ensured strong profit delivery. In our Blended Branches network each region grew organic revenue by about 6% and the Waterworks business grew by 6.7%.

“Cash generation in the year was excellent and our balance sheet remains strong. We will continue to invest organically and in selective bolt-on acquisitions that meet our investment criteria. Given our strong financial position we are proposing a final dividend of 145.1 cents which brings the total dividend to 208.2 cents, 10 per cent ahead of last year.

“The Board expects to make further good progress in the year ahead. Whilst US market growth is currently broadly flat, consistent with the second half of 2019, we expect to continue to outperform. Our order books support continued modest growth in the months ahead and our business is performing well. We remain focused on maximising our organic revenue growth rate, gross margin expansion, tight cost control and strong cash generation.

“We recently proposed the demerger of our UK operations and work on this is progressing well. We have also announced that as part of our orderly succession plans Kevin Murphy will succeed me as Group Chief Executive in November. We are assessing the most appropriate listing structure for the Group going forward and we will continue to consult with shareholders“.

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