FTSE 100 listed Ferguson raised FY21 guidance boosted by strong third-quarter performance

Summary

  • Ferguson PLC had shown a revenue surge of 24.5% year-on-year to USD 5.91 billion during Q3 FY21.
  • FERG now expects to deliver trading profit ranging from USD 2.0 billion to USD 2.1 billion during FY21.
  • On the profitability front, the trading profit grew by about 65.4%, and adjusted EBITDA rose by around 61.2% during Q3 FY21.

Ferguson PLC (LON: FERG) is the industrial Company listed on the London stock exchange. FERG’s shares have generated a return of around 56.71% in the last 12 months. FERG is listed on the FTSE 100 index.

 Company Overview

Ferguson PLC (LON: FERG) is a leading distributor of plumbing and heating products. Moreover, FERG facilitates and connects thousands of suppliers and customers around the globe.

 (Source: Company presentation)

Q3 FY21 Financial Highlights (for three months ended 30 April 2021 as of 19 May 2021)

 

Robust revenue growth- FERG had witnessed a surge of 24.5% in revenue during Q3 FY21as compared to Q3 FY20. Moreover, the revenue for the U.S. business grew by around 23.3%, boosted by the high commodity price inflation. The organic growth remained around 20.1% for US-based revenues. However, the prior year comparative period was adversely impacted due to the emergence of the Covid-19 pandemic. The organic revenue in Canada had shown an increase of 35.2% during the period.

Channel Mix Improvement – The Company had shown substantial improvement of 110 basis points in the gross margins as it remained around 30.9% during Q3 FY21, benefitted by improvement in channel mix. Furthermore, the trading profit grew by about 65.4%, and adjusted EBITDA rose by around 61.2% during the period.

Significant reduction in net debt – Due to the strong cash generation, FERG had managed to reduce the net debt to USD 851 million as of 30 April 2021, while it was USD 1,823 million as of 30 April 2020. On the leverage front, the net debt to last 12 months adjusted EBITDA stood at 0.4x as of 30 April 2021. Moreover, the Company had also completed USD 140 million out of USD 400 million shares buyback program during the quarter.

Changes in the Board – The Company had appointed Kelly Baker as a non-executive director effective 01 May 2021.

One Year share price performance of Ferguson PLC

(Source: Refinitiv, Thomson Reuters)

FERG shares were trading at GBX 9,498.00 and were up by close to 2.46% as of 19 May 2021 at 01:11 PM GMT. The 14-day RSI stood at ~62.97, while the 20-day simple moving average was around GBX 9,254.00. FERG’s 52-week Low and High were GBX 5,804.35 and GBX 9,680.00, respectively. Ferguson PLC had a market capitalization of around £20.64 billion.

Business Outlook

FERG had delivered third-quarter results better than the expectations. Moreover, it had carried the positive momentum of Q3 FY21 in early May 2021. FERG had raised its FY21 financial guidance after delivering encouraging results for Q3 FY21. The Company had anticipated group trading profit ranging from USD 2.0 billion to USD 2.1 billion during FY21 as it would continue to outperform strong end markets during the last quarter of FY21. Overall, the Company would remain committed to investing in a world-class supply chain and digital capabilities for long-term growth.

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