• Group revenue is up 8.5% in the first quarter to $5.6bn
• Shares dwindle 3% in early morning trading however as results fall slightly below market expectations
• We recommend Ferguson as a ‘buy’ for medium risk investors geared to growth

Plumbing and heating products group Ferguson provided a first quarter update today which showed an 8.5% increase in revenue to $5.6bn and a 10% rise in trading profit to $432m. The company said organic growth in the US amounted to 9.6% and was widespread across all regions and business units. Ferguson said that its UK business saw a 9.5% drop in revenue on a constant currency basis, but the gross profit margin improved by 50 basis points.

Prospects in the US for further growth are positive as business in that country has remained good into the first part of the second quarter. The company expects trading profit for the full year to be line with expectations.

These are solid figures, although they were slightly below market expectations and some analysts detected signs of a slowdown in growth. The key US market continues to perform well and the reiteration of confidence in full-year forecasts is encouraging for investors, but the shares are down 3% in early morning trading. This follows a sharp drop in October as the market generally came off. The US economy remains strong and investors should stay focussed on that given Ferguson’s exposure to the region. We continue to recommend the shares as a ‘buy’ for medium risk investors geared to growth.

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