Shares in plumbing and heating supplies firm Ferguson (FERG) were among the few risers in the FTSE 100 on Friday after the company painted a picture of improving sales in the final quarter of its financial year.
Turnover from 1 May to 21 July was down 3.6% on last year having been down as much as 15% in April, the first full month of lockdown. In the USA, the firm’s largest market accounting for 88% of sales, turnover was down just 0.6% for the quarter compared with a drop of 9.3% in April. Shares added 2% to £70.14.
STEADY FLOW
The firm began reopening sites in May to allow customers access to its trade counters and by mid-June all of its counter locations were open while its showrooms have now opened for pre-booked appointments.
Its Blended Branches chain, which operates through nearly 1,500 stores across 50 states in the US, saw revenues drop 4.6% during the quarter, but its specialist Waterworks and HVAC (heating, ventilation and air conditioning) divisions saw turnover grow by 1.8% and 12.7% respectively.
The UK business, which represents just 7% of group sales, experienced a 29.1% drop in turnover over the quarter compared with a 60% drop in April, but the firm said revenue trends have been ‘more encouraging’ since lockdown restrictions were eased.
NO CHANGE TO FORECASTS
The firm flagged its effort to continue reducing costs, and the fact that it has a strong balance sheet with a ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) below one to one, but it passed on the opportunity to raise its full year earnings guidance.
According to Reuters, the consensus forecast is for revenues to fall 4% to $21.1 billion in the year to the end of July and to fall a further 1.3% over the next year to $20.84 billion.
Meanwhile what the company calls ongoing trading profit or EBITDA is expected to rise 4% to $1.86 billion in the year to end-July and to contract by 1.9% to $1.825 billion next year.
