Ferguson PLC (LSE:FERG) increased its final dividend 15% and extended its share buyback by a further US$0.5bn even as the US-focused plumbing group saw growth slow in the fourth quarter and expects it to decelerate even more in the coming year.
The £21bn group, which was ejected from the FTSE 100 earlier this year as it switched to a primary listing in New York, reported sales growth of 21.4% to US$7.97bn for the fourth quarter to end-July, down from 23.1% in the third quarter and 29.1% in the first half.
For the full year, this meant net sales came in at US$28.6mln, growth of 25.3% that was driven by a mix of organic growth and bolt-on acquisitions, of which seven were completed during the latest quarter to add roughly US$$470mln of annualises revenue.
Operating profit grew 23.1% to US$814mln in the fourth quarter, down from 36.9% in the third and 68.3% in the first half, though the adjusted operating margin was back up to 10.7% from 10.3% in the third and 10.2% in the first half.
Growth was slower due to tougher comparative figures from the fourth quarter last year, the company said.
For the coming year, guidance was given for “low single digits” of net sales growth, with adjusted operating margin of 9.3% to 9.9%.
As central banks hike rates, interest expenses are set to potentially rise to US$170-190mln from US$148mln in the past year.
Capital expenditures are expected to rise to US$350-400mln from US$290mln in the past year.
Chief executive Kevin Murphy said the quarterly performance was driven by “continued market share gains and our ability to appropriately manage and pass through price inflation”, and despite labour and supply chain challenges.
“We are well positioned for the year ahead with diversified end market exposure and a strong balance sheet. The agility of our business model will enable us to navigate macro economic headwinds.”
The final dividend was increased to US$1.91 per share from US$1.665 a year ago, bringing the total to US$2.75 per share, an increase of 15% for the year in dollar terms.
From the new financial year, Ferguson is moving to a quarterly interim dividend, with a first expected dividend to be declarated alongside Q1 results in early December.
Shares in the company extended their losses to 9,808p after the results, down 2% for the day and down 26% for the year to date.