13th May 2020 08:45
(Alliance News) - Ferguson PLC said Wednesday the "strong" momentum seen in the first half of its financial year has been restrained since by the Covid-19 outbreak.
The plumbing and heating products distributor said revenue from its ongoing operations in the US and Canada were up slightly in the third quarter but trading profit took a hit.
In the three months to April 30 - Ferguson's financial third quarter - revenue was up 0.9% year on year to USD4.75 billion from USD4.71 billion, but a 7.7% rise in February and March was offset by an 11% decline in April.
In the US, Ferguson recorded 1.9% revenue growth in the third quarter but Canada suffered a 16% fall.
In the UK, revenue dropped 27% to USD417 million, while the unit made a trading loss of USD12 million.
Group trading profit in the quarter slipped 1.5% year on year to USD334 million from USD339 million. Ferguson noted it took a USD17 million hit from changing accounting standards to utilise IFRS 16, which governs lease accounting.
Ferguson is currently de-merging its UK business, Wolseley. The company said its plans remain unchanged but the timing will depend on "the stabilisation of market conditions".
Chief Executive Kevin Murphy said: "Our strong revenue momentum in February and March was adversely impacted in April as federal, state and local Covid-19 restrictions and safety measures brought about a reduction in demand. We have rapidly implemented responsible working practices to protect the health and wellbeing of our associates and with few exceptions our traditional branch network remains open."
Murphy said Ferguson has moved to protect its cost base and cash flow. Part of this has included suspending its USD500 million share buyback, pausing any merger & acquisition activity, cutting its interim dividend, and reducing capital expenditure by USD280 million to USD300 million.
At April 30, Ferguson had USD3.1 billion of available liquidity comprising readily available cash of USD1.3 billion and USD1.8 billion of undrawn facilities.
"We are confident these actions coupled with the strength of our balance sheet will serve us well in the coming months and years. As a value-added distributor Ferguson remains well positioned to support our customers, vendors and communities during this challenging time while continuing to build our capabilities for the long-term," Murphy added.
In the nine months to April 30, revenue from ongoing operations was up 3.2% year on year to USD14.64 billion, while trading profit was 2.8% higher at USD1.13 billion.
Shares in Ferguson were 0.8% higher in London on Wednesday morning at 6,014.00 pence each.
By Paul McGowan; [email protected]
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