Ferguson SWOT & PESTLE Analysis

Strength

1. Consistently strong operating and financial performance: Ferguson PLC has displayed a strong and consistent financial performance over the last six years. In 2019 revenue or the net sales for Ferguson PLC was £ 22.01 billion which is 6.07% higher than the previous year. In 2018, the net revenue or sales generated £ 20.75 billion. The company managed to show strong financial performance in a globally weak economic environment. Ferguson PLC has maintained manufacturing efficiency year on year with improved profitability. Ferguson launched automated valve for the oil and gas industry which gave a boost to its sales. The overall profit before tax rose to $1,324 million.

2. Strong position in USA’s fragmented market: Ferguson PLC has managed to make significant returns from its main focus areas of 14 businesses that is spread across three countries by well equipping itself. The company has maintained its number one or two market position in majority of the nine strategic business units that it operates. Also, Ferguson has recognized strong growth opportunities that will arise from continued consolidation of these fragmented markets. It aims to maximize the shareholders’ value by leveraging its proficiency and scale in providing a wide range of products and services from across business units. The company’s low US costs and improved margins can be attributed to the obtained synergic benefits. Moreover, these markets have helped in generating strong growth, gross and net margins and good ROC in all the business units.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Combating climate change by controlling and reducing carbon emission through suppliers and distribution centers: Every organization has to contribute to address climate change and reduce carbon and water footprints. After Paris climate agreement, laws and regulations have become very stringent. Every organization has shown a trend to work towards this issue and disassociate from the suppliers or distributors not following it. Global warming has become one of the biggest challenges today. Ferguson PLC’s carbon emissions improved by 12.9% per $ million compared to the 2015/16 baseline. The supplier’s fleet has started to use fuel efficient methods and increased use of natural gas. The distribution centers have started to use renewable energy. Similar trend is followed by office sites in Canada.

2. Reduction in waste disposal to land and increased recycling process: For environmental protection, companies across all the industries have started undertaking environmental initiatives for waste minimization. Ferguson was to reduce the total waste by 8.1% of the total revenue in the financial year of 2019 as compared to FY16. This achievement was possible due to the concerted efforts of the company towards adoption of waste reduction initiatives and fast paced revenue growth. Along with reduction, the recycled waste during the year accounted for a significant 24.1%. An additional number of 60 new recycling locations was added by Ferguson in the US business along with the recycling of corrugated cardboards, pallets, scrap metal and bottles, shrink wrap, and cans. Some of the other waste minimization strategies include reusable totes in distribution centers and discontinued products’ donations.