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FTSE listed plumbing and heating supplier Ferguson is to pay GBP289million in special dividends to investors after completing the sale of its UK business in January.
The company sold Wolesley in a GBP308million deal to private equity firm Clayton Dubilier & Rice and have promised to give shareholders a 180 cents per share dividend in May from the net proceeds of the sale.
Investors will also receive a 72.9 cents per share interim dividend the same month from the FTSE 100 group due to its strong performance in the six months to the end of January.(C) Provided by This Is Money The company sold Wolesley in a GBP308million deal to private equity firm Clayton Dubilier & Rice and have promised to give shareholders a 180 cents per share dividend in May
Its overall revenues surpassed GBP10billion thanks to solid growth in its US business, where revenues grew 4.1 per cent to GBP9.7billion, and underlying trading profit climbed by 11.2 per cent to GBP823million.
Ferguson said its US residential end markets operations did particularly well on the back of rising numbers of housing starts, permits, and activity in its repair, maintenance and improvement division.
This helped offset relative weakness in commercial markets, which the firm blamed on construction site job delays, while it attributed a 'tough environment for manufacturing' for a 19 per cent decline in sales at its industrial markets branch.
Similarly, its comparatively smaller Canadian business experienced weakness in industrial markets, but a strong performance in its residential division and its underlying profit rose by 24.1 per cent to GBP605million.
Ferguson said its trade has continued to be strong during the third quarter, and its organic revenues have risen in the high single digits.
However, it admitted its outlook for the second half of the 2021/22 financial year remained 'very uncertain.'
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Chief executive Kevin Murphy remarked that the firm expects 'to generate above-market revenue growth in good residential markets aided by increasing inflation.(C) Provided by This Is Money Despite saying trade continued to be strong during the third quarter, Ferguson admitted its outlook for the second half of the 2021/22 financial year remained 'very uncertain'
'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.'
In addition, Ferguson additionally said it invested GBP162million in the first half, mainly on four acquisitions such as HVAC distributor Old Dominion Supply and geotextile company Atlantic Construction Fabrics.
Though shares in the company were flat this morning at GBP90.35, they have surged over the past year after revealing plans to sell-off Wolseley and focus on the American market, with the stock around 20 per cent higher than it was in February last year.(C) Provided by This Is Money Last week, Ferguson officially began its secondary listing on the New York Stock Exchange
Wolseley, which was Ferguson's original name until 2017, was only responsible for about 9 per cent of the parent group's earnings in the latest fiscal year and had encountered some disruption as a consequence of Covid-19.
Last week, Ferguson officially began its secondary listing on the New York Stock Exchange and plans to eventually have its primary listing on the exchange sometime in the future.
Russ Mould, an investment director at AJ Bell, said: 'It will now be interesting to see if Ferguson's shareholders feel any benefit from the US listing - a move that is financial in nature, rather than one that relates to the underlying business and its competitive position.
'Ferguson trades at a valuation discount to US peers Home Depot and Lowe's, and management is clearly hoping for an upward re-rating over time through greater visibility among US investors.
'In the end, however, improved financial performance, consistency of returns, strong cash flow and the manner in which management conducts itself are all likely to have a far greater say in the rating attributed to the stock, rather than where that stock changes hands.'