Ferguson restructuring helps double profits

RESTRUCTURING at Ferguson International, the labels, clothes-hangers and distribution group, has begun to pay off, with pre-tax profits almost doubling to pounds 9.7m for the year to 28 February.

The shares responded with an 18p rise to 323p, despite a total dividend that was only maintained at 12.5p.

Denis Cassidy, the chairman, said the improvement came despite difficult trading conditions. He attributed the rise in profitability to better control of costs and a set of more focused businesses.

'We have more clearly structured the group into three key divisions, with a fourth that we are winding down,' he said. The group was now set to expand in its core markets.

Overall turnover rose 10 per cent to pounds 121m. The star performer was the labels division, which produced 48 per cent of sales and 59 per cent of operating profits. 'That division is seeing the benefit of huge cost reduction and its strong position as a big supplier to leading retailers such as Marks & Spencer, Tesco, Sainsbury and Asda,' Mr Cassidy said.

The hangers business suffered from clothing retailers opting for lower-quality products as the recession wore on. But Mr Cassidy said he expected customers to return as the recovery in the UK firmed.

He was more concerned about Germany, where recession has hit hard, and France, where he expected booming trade to tail off.

The group's US business, a wholesaler of parts to installers of cable television, turned in a 7 per cent rise in operating profits to pounds 1.7m on turnover that increased 22 per cent to pounds 20.5m.

Mr Cassidy said that printing and publishing was being wound down and that disposals were likely.

Michael Saint, Ferguson's group managing director, is stepping down and the company is looking for a successor outside the group.