Builder is FTSE favourite as it overcomes US woes
PLUMBING and building supplies merchant Ferguson surged to the top of the Footsie leaderboard after it surpassed City forecasts.
Disciplined cost-cutting helped the group, formerly known as Wolseley, notch up a 6pc rise in revenue to £18bn and a betterthan-expected profit before tax of £1.1bn in the year to July 31.
Share Centre analyst Ian Forrest praised a ‘quick response’ to a slowdown in the US, where it makes around 90pc of its turnover, by cutting around 600 jobs.
This amounts to 2pc of its roles there – though many of the cuts were through early retirement.
US sales rose around 10pc despite the trickier market and it managed to squeeze in 14 bolt-on acquisitions in the financial year.
Last month it revealed plans to spin off the UK arm so it could focus on its North American side, which it said is ‘progressing well’.
Analysts expect the North American arm to be listed in the US and Wolseley UK, its British trading name, to stay listed in Britain. Ferguson shares rose 4.1pc, or 242p, to 6186p by close. Trading has tumbled at sofa- seller ScS, which the Sunderland- based group blamed on Brexit uncertainty and a sunny bank holiday.
Like-for-like orders slumped 7.6pc in the two months to September 29, it said in a trading update, sending shares down 7pc, or 16.5p, to 220.5p. Sirius Minerals tracked 5.9pc lower, down 0.2p, to 3.75p, after Berenberg brokers cut their target price on the fertiliser miner from 17p to 4p. Analysts cited ‘uncertainty’ about its financing for the cut, saying a strategic investor now ‘appears the only lifeline’. Astrazeneca slipped 1.7pc, or 125p, to 7136p after US medicine regulator the Food and Drug Administration refused to approve its therapy for smoker’s lung.
The group will work with the FDA to get the therapy through.
Revolution Bars inched 4.3pc lower, or 3p, to 66.8p, with sales slipping 3.5pc at existing sites in the year to June 29. Pre-tax loss widened from £3.6m to £5.6m – after refurbishing eight of its 77 sites for £1.4m. Boss Rob Pitcher has pledged to upgrade current sites before buying new ones.
Gold fell again – 0.6pc to $1.463 an ounce – as a lull in US-China trade tensions put investors off flocking to safe-haven assets.
Footsie gold miners Fresnillo (1pc higher, up 7p, to 690.6p) and Polymetal (down 0.04pc, or 0.5p, to 1139.5p) were hit by the fall and held the FTSE 100 back.
There was no enthusiasm to outsourcer Serco being awarded a contract worth up to £132m with the US Navy to support its amphibious ships – the first major contract award under a business unit it acquired earlier this year.
Shares in the firm, headed by Rupert Soames, closed 1.5pc lower, down 2.2p, to 147p. Aviation services group John Menzies lost 0.5pc, or 2p, to finish at 402p, despite contracts for services at four UK airports with the likes of Lufthansa and Wizz Air.
Rolls-Royce fell 2.2pc, or 17p, to 775.4p after acquiring Siemens’ electric and hybrid electric aerospace propulsion business.
The deal, announced in June, is the latest in a number of moves for the engine maker to get ahead in electric aviation.
Insurance giant Prudential was down (18.5p to 1456.5p) after announcing its Asian asset management unit Eastspring Investments will buy 50.1pc of Thai group Thanachart Fund Management for £112m.
It came a day after the City regulator fined it £24m over a lack of transparency in annuities sales.
And although brokers at Peel Hunt were animated about structural steel maker Severfield’s £18m acquisition of steelworking group Harry Peers, the City was not. Shares closed flat at 71.2p.