Ferguson first-quarter profit rises as U.S. residential activity picks up

(Reuters) – Plumbing parts distributor Ferguson Plc (L:) reported a 5% rise in adjusted first-quarter profit on Tuesday, boosted by an improvement in residential housing activity in the United States and said it was on track to spilt off its UK business.

In September, it named a new chief executive officer and said it would separate the UK operations in a bid to focus more on its business in the United States, its largest market.

Nelson Peltz’s Trian Fund Management LP disclosed a 6% stake in the company in June. It is among the best known U.S. activist hedge funds that take stakes in companies they view as undervalued and force major changes to generate returns for shareholders.

“Ferguson continued to take market share against a backdrop of flat U.S. markets and we remain firmly focused on maximizing organic revenue growth, while tightly managing gross margins and costs,” CEO Kevin Murphy said.

For the full year, Ferguson kept its outlook unchanged and said the planned demerger of Wolseley UK is expected to be completed in 2020.

However, the Virginia-based firm, which mainly serves the repair, maintenance and improvement markets, said its U.S. gross margins were slightly lower in the quarter, blaming tough comparisons from last year.

For Wolseley UK, which has been reported as non-ongoing operations, organic revenue dropped 4.2% due to uncertainty in the repair, maintenance and improvement markets, it said.

Adjusted group profit, which excludes UK operations, rose to $433 million from $413 million in the three months ended Oct.31, from a year earlier.

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