Ferguson PLC (LON:FERG) upped its final dividend by more than a fifth after a bumper year of handouts to shareholders as it reported strong growth in annual profit.
The plumbing and heating products firm on Tuesday said its ongoing trading profit rose 14.7% to US$1.51bn in the year to the end of July on revenue 7.5% higher at US$20.75bn.
READ: Ferguson boast strong US growth as quarterly revenues rise
The FTSE 100 group, which has returned over $2bn to shareholders during the year through dividends and buybacks, hiked the final dividend by 21% to 189.3 US cents and re-based future dividends by 10%.
“All businesses grew well and continued to gain market share, with the industrial business having a particularly strong year. Markets in the USA and Canada have remained good throughout the year despite recent inflationary pressures, though the UK remains tough,” CEO John Martin said in a statement.
“Given the group's track record of excellent cash generation and the ongoing strength of the balance sheet, a proposed final dividend of 131.9 cents has been recommended. This brings the total dividend to 189.3 cents, 21 per cent ahead of last year and includes an upwards rebasing of 10%,” he added.
The group paid a special dividend of US$4 per share amounting to US$974mln in June 2018 following the receipt of the proceeds from the disposal of the Nordics business. The group also completed the $675mln (£500mln) share buyback it announced last year at an average price £54.48 per share.
In the US, where Ferguson makes some 90% of its profit, revenue grew 11.3% during the year, boosted by good US residential and commercial markets as well as strong performance from its industrial unit, which delivered 20% organic sales growth. The firm said trading in Canada had been solid but that the UK remained challenging and that restructuring plans were underway in a bid to improve its performance.
The company said revenue growth in the first eight weeks of its new financial year had been broadly in line with the 2017/18 growth rate despite slightly lower growth in September than in August.
“The growth in our order books suggests continued growth in the months ahead,” Martin added.
Shares in Ferguson, which have risen a fifth in 2018, were 4.8% down at 6,213p in early trade.
Analysts at Markets.com attributed the drop to some profit taking and the softer UK performance.
“A lot of the strong US performance was expected so the weaker profits in the UK business are taking the shine off these earnings. Fundamentally, with 90% of profits and over 75% of revenues coming from the US and the business increasingly keeping all its focus on that market, strong US GDP growth will continue to support,” they wrote in a note to clients.
-- Updates adding share price, analyst comment --