Moody's Backs Ferguson To Emerge From Covid-19 Crisis Unscathed

(Alliance News) - Ferguson PLC will see its revenue fall due to the Covid-19 pandemic, but Moody's Investors Service on Friday said the heating and plumbing products supplier will benefit from cost control measures.

The ratings agency was weighing in on Ferguson's new USD600 million guaranteed senior unsecured notes due 2030. Moody's assigned a Baa2 rating with a stable outlook.

Moody's said: "The Baa2 ratings reflect Ferguson's relatively moderate impact from Covid-19, as well as the company's strong balance sheet position and good liquidity coming into the current downturn, which will buffer the impact of the disruption from the pandemic on its overall credit profile.

"Moody's expects that revenue may decline by up to 20% at the lowest 12-month trough of the pandemic, but that the company will be able to manage performance through cost control and cash allocation to keep its credit metrics within the parameters commensurate for a Baa2 rating."

In the three months to April 30 - Ferguson's financial third-quarter - revenue was up 0.9% year on year to USD4.75 billion from USD4.71 billion, but a 7.7% rise in February and March was offset by an 11% decline in April.

In May, Ferguson Chief Executive Officer Murphy last week said the company has moved to protect its cost base and cash flow. Part of this has included suspending its USD500 million share buyback, pausing any merger & acquisition activity, cutting its interim dividend, and reducing capital expenditure by USD280 million to USD300 million.

"We are confident these actions coupled with the strength of our balance sheet will serve us well in the coming months and years. As a value-added distributor Ferguson remains well-positioned to support our customers, vendors and communities during this challenging time while continuing to build our capabilities for the long-term," Murphy added.

Shares in the company closed 0.9% higher at 6,382.00 pence each in London on Monday.

By Eric Cunha; ericcunha@alliancenews.com

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