Ferguson recovery puts divi back in the pipeline
PLUMBING giant Ferguson has brought back its dividend after a stronger than expected recovery from the coronavirus crisis.
The FTSE 100 firm, formerly known as Wolseley, said a surge in demand for home improvements and cost-cutting measures helped to cushion the pandemic’s blow, giving it confidence to restore its investor payout.
Ferguson shelved the divi in April, along with its share buyback scheme, in order to preserve cash. But yesterday it announced plans to pay $2.08 (162p) per share or £364m for the 2019-20 financial year, matching the previous annual payout.
Ferguson said revenues edged down from £17.1bn to £17bn in the year to July 31, while profits fell from £1bn to about £981m.
The company, which makes most of its money in the US, said demand for services had initially been hammered by virus lockdown measures. But it enjoyed a rush of business afterwards from customers who subsequently wanted to carry out home improvements and repairs. Shares rose 6pc, or 446p, to 7862p after the announcement.
But Russ Mould, AJ Bell’s investment director, warned payouts could dry up again if corporate profits are hammered by a fresh wave of coronavirus restrictions.
It was a generally gloomy day for the FTSE 100, with the blue-chip index sagging 0.51pc, or 30.43 points, to 5897.50. Some of the biggest fallers included engineering giant Rolls-Royce, which fell 5.9pc, or 8.85p, to 140.4p, and High Street bank HSBC, which was down 3.3pc, or 10.05p, to 298.5p.
Landlords were also suffering, amid concerns that stricter virus lockdown measures could be on the way in more areas of England, with British Land falling 4.2pc, or 14.6p, to 331.1p and Land Securities off 3.1pc, or 16.5p, to 512.4p.
But medical devices maker Smith & Nephew gained 0.9pc, or 13.5p, to 1493p after announcing a £190m takeover. The British firm is buying the orthopaedics division of Integra LifeSciences, which makes replacement wrist, ankle and shoulder implants.
S&N said this was a fast-growing market and the deal would provide it with a strong pipeline of new products to sell.
Elsewhere, the FTSE 250 index of mid-sized companies fell 1.13pc, or 196.61 points, to 17173.66.
Car dealership chain Pendragon lost 0.2pc, or 0.01p, to close at 7.46p, after revealing it had returned to profit since lockdown restrictions eased.
The firm said its revenues had been cut in half to £1.2bn in the year to June 30 after sales were hit by the restrictions. Its losses for the period narrowed slightly, from £32.2m to £31m. However Pendragon said that in July and
August, trading had seen a ‘significant improvement’.
It made an underlying profit of £7m compared to a loss of £12m for the two months last year.
Shares in troubled lender Amigo fell 13.7pc, or 1.64p, to 10.32p after founder James Benamor’s bid to return was rejected by shareholders. The 43-year-old stepped back from the business in 2018 but has since become embroiled in a bitter spat over its strategy with company bosses.
He wanted to sack finance chief Nayan Kisnadwala and chairman Roger Lovering and take charge himself – but his attempted coup was rejected by 57.24pc in a vote.
Shares in ScS fell 7.3pc, or 16p, to 204p after the sofa chain swung to an annual loss. ScS posted losses of £3.1m for the year to July 25 against profits of £14.3m the previous year as revenues tumbled by a fifth after lockdown forced the temporary closure of all 100 stores. But sales almost doubled – up 92.2pc – in the last nine weeks of the financial year after stores reopened at the end of May.