19th May 2020 12:30
(Alliance News) - Moody's Investors Service on Tuesday affirmed its rating for Ferguson PLC, after the heating and plumbing products manufacturer reported promising third quarter trading.
Moody's affirmed Ferguson's Baa2 issuer rating and its Baa2 rating on its backed senior unsecured notes.
"The affirmation of Ferguson's ratings follows the company's recent third-quarter trading announcement showing a 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 said.
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.
"Moody's expects that revenue may decline by up to 20% at the lowest 12-month trough of the coronavirus 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," the ratings agency added.
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.
Ferguson shares were 0.2% lower at 6,004.00 pence each in London on Tuesday shortly before midday.
By Eric Cunha; [email protected]
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