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TOP NEWS: Ferguson boosts shareholder returns amid positive interim

ALN

Ferguson PLC on Tuesday increased its return to shareholders with a higher dividend and a doubled share buyback programme, following a strong first-half performance.

Shares in Ferguson were down 1.6% at 11,480.00 pence on Tuesday in London.

For the six months ended January 31, the Wokingham, Berkshire-based plumbing and heating products supplier posted a pretax profit of $1.24 billion, up 72% from $720 million in the same period a year before, while net income more than doubled to $996 million from $429 million.

Ferguson's gross margin for the period was 30.9%, up 90 basis points from 30.0% a year prior, noting this was despite cost price inflation being ‘in the mid teens’, driven by finished goods in the second quarter.

Net sales for the first half grew 29% year-on-year to $13.31 billion from $10.31 billion, as residential end markets in the US remained robust, Ferguson said, with growth in new residential housing starts and permits, as well as residential repair, maintenance and improvement.

In additional, non-residential end markets continued to grow in the US on higher demand.

Ferguson declared an interim dividend of 84 US cents per share, up 15% from 72.9 cents a year before.

In addition, Ferguson said that, taking into account its strong financial position, it will increase its share buyback programme to $2.0 billion from $1.0 billion. So far, Ferguson has completed $659 million of the programme and expects to complete the remainder over the next 12 months.

Looking ahead, Ferguson said its markets remain supportive, and expects solid revenue growth in the second half, remaining confident in meeting its full year expectations.

‘Our associates delivered another excellent performance with continued market share gains and strong price realization while navigating industry supply chain pressures. We are pleased with earnings growth that significantly outpaced revenue growth to generate another quarter of strong operating leverage. Our balance sheet is strong and we continue to return capital to shareholders through the ongoing share buy back program, which we are increasing by an additional $1.0 billion,’ said Chief Executive Kevin Murphy.

On Thursday last week, Ferguson's shareholders voted in favour of the plan to move the group's primary listing to New York Stock Exchange, keeping only a standard listing on the London Stock Exchange.

As a result of giving up its premium listing in London, which will take effect on May 12, Ferguson will drop out of the FTSE 100 index, FTSE Russell had confirmed early last month.

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