Reading, England-based Ferguson — the world's largest distributor of plumbing and heating products — reported its 2018 third quarter financial results on Tuesday for the period ended April 30, showing continued and accelerated sales gains, powered by the U.S. market.
Rebranded from Wolseley as July 31, 2017, Ferguson posted total Q3 sales of $5.08 billion, up 10.2 percent year-over-year, with organic sales up 7.1 percent. The company's Q3 profit of $356 million jumped 17.1 percent. Gross margin of 29.3 percent grew 0.4 percent YoY, while the completed a $1.2 billion sale of Stark Group on March 29.
"The U.S. continued to grow strongly with organic revenue growth of 10.6 percent in the quarter," said John Martin, Ferguson CEO. "Growth was broadly based across all U.S. regions, supported by good market conditions. We also continued to manage gross margins effectively, making further progress. We generated good growth in Canada, and in the U.K. we continued to focus on executing the restructuring plan. The fourth quarter has started well with organic revenue growth in line with the third quarter. Given the third quarter outturn, the Group is well positioned for a successful outcome for the year."
In Q3, 80.9 percent of Ferguson's sales were in the U.S.; 12.4 percent were in the U.K.; and 6.7 percent were in Canada and Central Europe. Organic sales grew 10.6 percent YoY in the U.S.; grew 0.7 percent in the U.K.; and grew 6.5 percent in Canada and central Europe.
Ferguson said in Q3, its U.S. organic growth included price inflation of about 3 percent, while acquisitions contributed another 0.8 percent.
"U.S. market growth continued to be good with residential demand supporting broadly-based growth across all regions," the company said. "Commercial markets, whilst lower growth than residential, also remained good and industrial markets continued to recover strongly. All business units continued to generate good organic growth in the quarter and gain market share. Revenue growth by end market was strong in residential, commercial improved and industrial grew particularly well as it benefited from a small number of larger projects. Gross margins were ahead due to improvements in purchasing and better pricing controls."
Through the first nine months of Ferguson's fiscal 2018, sales of $15.11 billion increased 8.7 percent YoY, while profit of $1.05 billion increased 15.1 percent. In the U.S., nine-month sales of $12.02 billion increased 10.9 percent, while profit of $982 million increased 17.5 percent.
Ferguson didn't break out specific financial information for its Industrial segment.