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(Alliance News) - Ferguson PLC on Tuesday reported solid profit growth in the first half, allowing the plumbing and heating products supplier to unveil a set of shareholder returns.
For the six months to January 31, the company recorded pretax profit of USD739 million, up 18% from USD628 million the year before.
Underlying trading profit grew 12% to USD837 million from USD746 million.
Revenue in the first half improved 4.2% year on year to USD10.31 billion from USD9.89 billion. Ferguson reported growth in both the US and Canada, with revenue growing 4.1% and 5.2%, respectively.
"Residential end markets, which comprise just over half of our US revenue, remained solid in the period generating good growth. New residential housing starts and permits continued to grow well in to the second quarter, as did residential RMI. Commercial markets were more challenging and Civil markets were impacted as a result of construction site job delays. Industrial markets remained soft in part due to a tough environment for manufacturing during the pandemic," Ferguson explained.
Cash flow from operations rose to USD739 million from USD636 million.
Chief Executive Kevin Murphy said: "Ferguson delivered good top-line growth in the first half and despite challenging personal and professional circumstances, our associates continued to deliver for our customers. We continued to carefully manage the cost base to ensure excellent profit growth and solid cash flow generation. We remain confident in our strategy and are optimistic about our prospects in 2021 and beyond."
Ferguson's operating costs were flat year on year at USD2.28 billion.
As a result, the company has declared an interim dividend of 72.9 US cents. Ferguson cancelled its interim dividend last year owing to the uncertainty caused by the pandemic, but ultimately returned the interim payout in a bumper final dividend of financial 2020.
On top of the interim dividend, Ferguson will pay a special dividend of 180 cents, returning most of the net proceeds from its disposal of Wolseley UK.
Finally, Ferguson has also announced that it intends to buy back up to USD400 million of its shares over the next 12 months. The company had previously suspended a USD500 million buy back programme in early 2020.
Murphy continued: "Since the start of the third quarter, we have continued to trade well, generating high single digit organic revenue growth. While the outlook for the second half remains very uncertain, we expect to generate above market revenue growth in good residential markets aided by increasing inflation.
"However, we expect this to be partially offset by increasing supply chain pressures, transportation costs and the reversal of temporary cost reduction actions taken during the initial stages of the lockdown starting in April of last year. We are well positioned to manage through this environment and we will continue to invest in talented associates and digital capabilities to serve our customers and take advantage of market opportunities."
Ferguson noted it will change to US GAAP reporting from August 1, 2021 in order to "aid comparability with other US peers".
Shares in Ferguson were 0.4% higher in London on Tuesday morning at 9,070.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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