March 27, 2018 / 6:43 AM / 6 months ago

Ferguson reports profit rise on U.S. business strength

(Reuters) - Heating and plumbing products supplier Ferguson Plc (FERG.L) on Tuesday reported a rise in first-half profit, as strength in its main U.S. market offset tough trading conditions in the UK.

Shares in the company rose as much as 6 percent to 5,440 pence, making it the top gainer on the FTSE 100 .FTSE index.

The company also proposed a special dividend and share consolidation of about $1 billion (£702.84 million), or $4 per share, subject to completion of the sale of its Nordics building materials distribution business, Stark Group, expected at the end of March.

Ferguson, which flagged challenging plumbing and heating markets in the UK, said it closed an additional 52 branches in the UK as part of its restructuring programme.

The group changed its name from Wolseley last year, to match its U.S. brand of Ferguson, a business that accounts for 79 percent of its revenue.

The company has increasingly banked on growth in its U.S. business to drive results, against challenging market conditions in the UK and parts of Europe, which has prompted a planned exit from the Nordic region.

The company also increased its interim dividend by 10 percent to 57.4 cents per share.

Ferguson said group organic revenue growth since the end of January has continued in line with growth in the second quarter and said it is confident of achieving trading profit in line with analyst expectations for the full year.

The company said ongoing trading profit rose to $698 million for the half year ended Jan. 31, from $607 million a year earlier.

“The group delivered a strong trading performance in the first half driven by good growth and margin progression in the USA,” Ferguson said.

Reporting by Radhika Rukmangadhan in Bengaluru; Editing by Subhranshu Sahu, Akshay Lodaya

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