UPDATE 2-Plumbing supplier Ferguson rewards shareholders after profit jump

* Increases the interim dividend and announces share buyback

* The outlook for the second half of the year is still very uncertain

* High single digit organic sales growth in the current quarter (analyst comment added, stock movement)

By Vishwadha Chander and Pushkala Aripaka

March 16 (Reuters) – Ferguson announced a special dividend and share buyback of around $ 400 million each on Tuesday after cost reductions and strong demand for U.S. home improvement helped the plumbing and heating retailer post its first-half profit increase.

Tuesday’s results were in line with those of U.S. competitors Home Depot and Lowe’s Companies, both of which also benefited from home stuck Americans snapping building materials through COVID-19 lockdowns in Ferguson’s largest revenue market.

London Stock Exchange-listed Ferguson, whose shares have been trading in the US since this month, announced that half-year earnings rose 12.2% as home sales rebounded on a rebound in the real estate market.

However, analysts said that pandemic-induced demand for home improvement chains could decline if COVID-19 vaccination programs are introduced.

Ferguson warned that the outlook for the second half of the fiscal year remains “very uncertain” and expects mounting supply chain pressures, transportation and other costs to partially offset revenue growth.

The London-listed shares of the US-based company rose slightly by 1115 GMT to £ 90.44.

“We are well positioned to cope in this environment,” said chief executive Kevin Murphy, adding that the company has achieved high single-digit organic sales growth since the beginning of its third quarter.

The company’s special shareholder payout reflects the sale of its UK-facing business for approximately $ 420 million this year. At the same time, it increased the interim dividend by 5% to 72.9 cents per share.

The sale of the British arm Wolseley UK should enable the group to concentrate exclusively on the main business in the USA. The company also operates in Canada.

The story goes on

Ferguson’s underlying trading profit increased to $ 837 million for the six months ended January 31, from $ 746 million last year on revenue of $ 10.31 billion.

Liberum analysts said revenues would be “a little disappointing” for the market given the strength of the US housing market.

(Reporting by Vishwadha Chander and Pushkala Aripaka in Bengaluru, editing by Rashmi Aich and David Goodman)

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