Ferguson Share News (FERG)

(Sharecast News) - Ferguson shares were well into positive territory on Wednesday morning, after it reported strong revenue growth of 24.5% in its third quarter, to $5.92bn (£4.17bn), and lifted its full-year forecasts.
The FTSE 100 plumbing and heating products supplier said that included 20.1% organic growth in the United States, boosted by sequentially increasing sales price inflation and easing prior year revenue comparatives.

US market demand accelerated through the quarter, the firm said, as the US economy continued to re-open.

Gross margins were 110 basis points higher year-on-year at 30.9%, which Ferguson said was driven by its ability to pass through price in a period of "acute" inflation and channel mix improvement.

It added that cost control measures ensured "excellent" underlying trading profit delivery of $560m, which was $227m higher than the prior year.

Ferguson said operating cash generation was "solid" in the quarter, with the balance sheet described as "strong" as its pro-forma leverage stood at 0.8x.

The company also confirmed that it completed $140m of its $400m share buyback programme in the period.

"Ferguson has brought forward its third quarter announcement as we delivered strong revenue and profit growth ahead of expectations," said chief executive officer Kevin Murphy.

"Our associates continued to provide outstanding service and support to our customers in the face of increasing supply chain pressures leading to product availability concerns.

"We were pleased with the strong earnings growth and margin expansion arising from continued operating efficiencies and pass through of acute price inflation as the US economy re-opens."

Murphy said revenue picked up strongly through the quarter, continuing into early May, adding that given the better-than-expected third quarter results, the company was revising its outlook for the 2021 financial year upwards as it expected to continue to outperform strong end markets in the final quarter.

Based on the board's latest view of the operating environment, he said it was expecting to generate group trading profit in the full year, including the impact of IFRS 16, in the range of $2bn to $2.1bn.

"We are well positioned to manage through the near term though we are mindful of the ongoing effect of inflation on sales and gross margins and its potential adverse impact on operating costs.

"Looking ahead, we are confident in our strategy and we remain committed to investing in our talented associates, world class supply chain and digital capabilities to better serve our customers."

At 0828 BST, shares in Ferguson were up 3.95% at 9,636p.