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Ferguson profits heat up 12%

Reporting its performance for the three months of trading ended October 31, heating and plumbing specialists, Ferguson plc (LON:FERG), announced bumper profits during Q1 2021.

The company’s revenues bounced 3.1% year-on-year, up to $5.37 billion, while its gross margin narrowed slightly, down by 0.1%, to 29.6%.

Its main progress was seen in the company’s profits, with trading profits up 11.8% year-on-year, from $451 million, to $504 million. Likewise, Ferguson underlying trading profits grew 12.2% to $486 million, while adjusted EBITDA hiked 12.7%, to $558 million.

In terms of the company’s cash position, strong trading and cost control meant that even with its two US bolt-on acquisitions, its net debt to adjusted EBITDA ratio fell from 0.8X, to 0.5X.

Commenting on the performance, Ferguson Chief Executive, Kevin Murphy, said: “We are pleased with the revenue growth in the first quarter and today’s results further demonstrate the resilience of our business model. We are firmly focused on revenue growth and continued market share gains at the same time as carefully controlling gross margins and costs. This approach has enabled us to deliver robust trading profit growth in the first quarter. Cash generation was good and our balance sheet remains strong. This has enabled us to continue to invest in the business including our technology platforms to drive the best digitally enabled customer relationships and a seamless omni-channel experience.” 

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“Since the start of the second quarter Ferguson has continued to generate low single digit revenue growth in broadly flat markets although we remain cautious on the outlook for the year as a whole , considering current pandemic trends. 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.”

Following the update, Ferguson shares rallied by a modest 0.19%, to 8,496.00p apiece 08/12/20 12:30 GMT. This price is 21.3% ahead of analysts’ consensus target price of 6,689p, and around 0.89% behind its year-to-date high of 8,572p per share.

Analysts currently have a consensus ‘Hold’ stance on the company’s stock, alongside a 52.71% ‘Underperform’ rating from the Marketbeat community. The company has a p/e ratio of 20.06, and a dividend yield of 3.13%.

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