(Reuters) - Shares of Ferguson Plc <FERG.L> fell 5 percent on Tuesday after it said organic revenue growth in September fell from the previous month and warned of challenging UK markets.
The company reported a better-than-expected full-year trading profit and revenue, but investors shrugged off the good results. Ferguson shares were down 5.1 percent at 6196 pence at 0707 GMT and was the second biggest loser on the UK
Ferguson has been betting on growth at its U.S. business to drive results, against the backdrop of challenging market conditions in the UK and parts of Europe, which prompted it to exit its Nordics business this year.
It changed its name from Wolseley last year, to match its U.S. brand of Ferguson, a business that accounted for more than 90 percent of trading profit in the year.
The company said the first eight weeks of the new year were broadly in line with the overall growth rate last year, but cautioned that the growth fell in September from August.
Still, Ferguson said that growth in its order books suggests continued growth in the months ahead.
The FTSE 100 company reported ongoing organic revenue growth of 7.5 percent, above analyst estimates of 7 percent as it benefited from strong demand in U.S. markets, mainly industrial customers.
The U.S. business reported about 10 percent growth in organic revenue, with the industrials segment up 20 percent.
The company said organic revenue in the UK was 5.3 percent lower due to closing branches and the exit of the low margin wholesale business, with gross margins at similar levels to last year.
Ferguson said it made some good progress in improved category management, re-configuration of its logistics and supply chain and the reduction in branch network and distribution centre capacity.
Ongoing trading profit rose to $1.51 billion (£1.16 billion) for the year ended July 31 from $1.31 billion a year ago. Revenue rose 7.6 percent to $20.75 billion.
Analysts expected a trading profit of $1.50 billion on revenue of $20.66 billion, according to a company compiled consensus.
The company, which was founded in 1887, also proposed a final dividend of 131.9 cents, bringing the total dividend to 189.3 cents, 21 percent ahead of last year.
(Reporting by Shariq Khan in Bengaluru; Editing by Amrutha Gayathri, Bernard Orr)