Ferguson sinks as it cuts guidance

FTSE 100 plumbing supplies firm Ferguson (LON:FERG) watched its share price plunge by 9.85% to 4,660.50p (as of 13:30 GMT) after it warned that profits for the year would be at the lower end of analysts’ forecasts. Management said that while performance in the six months to 31st January had been strong, conditions had moderated in recent trading and organic revenue growth for the year is now expected to be between 3% and 5%.

Chief executive John Martin commented: “Ferguson performed well in the first half with continued strong organic growth in the US of 9.7%. Growth in the US was widespread across all geographic regions, major business units and end-markets. In our Blended Branches network the East grew organic revenue 8.4%, with the West up 10.1% and the Central region was 9.2% ahead. The Waterworks business also made good progress generating organic revenue growth of 7.8%. In other geographies residential markets weakened in Canada and in the UK markets were flat.

“After a strong revenue performance in the first half our growth rate has moderated recently in line with conditions in our markets. While we still expect to generate further revenue growth in the second half, we have revised our estimates of Group organic revenue growth to between 3-5%. Consequently, we expect trading profit for the full year to be towards the lower end of the range of analysts’ expectations.

“We will continue to execute our strategy of delivering excellent customer service to maximise profitable growth opportunities whilst remaining vigilant on costs. Our capital allocation policy is unchanged and we will continue to maintain a strong balance sheet“.