Ferguson raises expectations after strong first quarter

Ferguson said its expectations for annual results had increased after the plumbing and heating distributor reported a surge in first-quarter profit.

Operating profit for the three months to the end of October rose 64.2% to $739m (£556m) as reported net sales increased 26.6% to $5.37bn. On an adjusted basis, operating profit rose 58.5% to $767m.

Revenue growth in the second quarter has been similar to the first, Ferguson said in a trading update. Growth is likely to ease in the second half but the company said its full-year expectations had increased. It did not publish guidance.

The FTSE 100 group said its gross margin increased 1.7% to 31.3% as it managed inflation and controlled costs. Results were boosted by the US where net sales rose 27.1% supported by price inflation in the low teens and solid markets for residential and commercial construction. Net sales rose 19.6% in Canada.

Ferguson said: "Since the start of the second quarter, Ferguson has generated revenue growth similar to that of Q1 2022.

"We continue to expect a tapering of growth in the second half on tougher prior year comparatives and we remain mindful that the recent tailwinds from inflation on gross margins will likely moderate, although the timing and extent remain uncertain. Given the strong momentum in the business and the agility of our business model, our full year expectations have increased."