UPDATE 2-Ferguson hits record high as cost cuts and home improvement pump up profit

Shaniqua Juliano

* Full-year profit beats expectations * Company reinstates interim dividend * Shares hit record high (Adds shares, analyst comments, analysts’ estimates, details) Sept 29 (Reuters) – Britain’s Ferguson restored its dividend on Tuesday as cost-cutting measures and strong demand for home improvement and air-conditioning repairs helped it beat annual profit […]

* Full-year profit beats expectations

* Company reinstates interim dividend

* Shares hit record high (Adds shares, analyst comments, analysts’ estimates, details)

Sept 29 (Reuters) – Britain’s Ferguson restored its dividend on Tuesday as cost-cutting measures and strong demand for home improvement and air-conditioning repairs helped it beat annual profit expectations, sending its shares to a record high.

The residential and commercial heating and plumbing parts distributor, which employed around 35,000 people at the end of 2019, said it had cut its permanent headcount by 2,100 over the course of the year across the United States, Canada and the United Kingdom, and closed 94 branches.

At the peak of COVID-19 lockdowns, Ferguson saw revenues slide across its markets. However, it said that over the summer it benefited from more customers having their heating and air conditioning systems repaired or remodelled while stuck at home, benefiting the group.

“It is impossible to predict the future progress of the virus, or its economic impact and we expect the current levels of uncertainty to continue for the foreseeable future,” said Chief Executive Officer Kevin Murphy.

Ferguson’s performance reflected that of U.S. peers Home Depot and Lowe’s Cos Inc, who also benefited from demand for home improvement.

The company, which has intended to demerge its UK business since last year to focus on its main U.S. business, said the timing of the demerger process was uncertain and that it was considering other options to exit the unit.

On Tuesday, it appointed insider Bill Brundage as its finance chief to succeed Mike Powell, who will be leaving to join packing firm Mondi.

Ferguson, which suspended its interim dividend in April, restored payouts to the same level as last year. It proposed a final dividend totalling 208.2 cents per share.

“The restoration of the dividend crowns a remarkable year, during which Ferguson has demonstrated remarkable resilience,” said Barclays analysts.

Shares in the London-listed company were up 5% by 0807 GMT.

The company’s trading profit from continuing operations for the year ended July 31 was about $1.67 billion, beating analysts’ average estimate of $1.59 billion.

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