The plumbing and heating distributor has begun to see an impact from the coronavirus crisis
Ferguson intends to seek US listing once uncertainty passes
- Group also considered moving primary listing to the US but acknowledged it would not achieve the 75% approval rate needed from shareholders
- Results to end of March show trading not impacted by the virus, yet has seen a significant impact over last 10 days
- Interim dividend is suspended and it is unable to provide any guidance for the full year to July
- Recommendation: Due to the strong balance sheet and more defensive revenue mix, we maintain our ‘Hold’ recommendation
Ferguson, the world's largest distributor of plumbing and heating products, said today that it intended to seek a US listing for its shares once the general uncertainty caused by the coronavirus outbreak has reduced. The company also considered moving its primary listing to the US but it became clear that it would not achieve the 75% approval rate needed from shareholders because some would be restricted for technical reasons. The chairman, Geoff Drabble said today that having its primary listing in the US was still the right outcome for the company, given that most of its business is based in the US, and he still expects a shareholder vote on that in due course. The company also said that while its trading had not been affected by coronavirus up to the end of March, the past 10 days had seen a significant impact. Ferguson has decided not to pay an interim dividend and said it could not provide any guidance for the full year to July.
The shares remained largely unchanged this morning in response to the news. While the decision not to move the primary listing to the US at the moment may seem surprising given that most of the company’s business is based there, Ferguson clearly still sees that as the ultimate goal. Coronavirus has put a temporary brake on the changes, which include the demerger of the UK operations, but as with so many other companies Ferguson has gone into a “wait-and-see” mode rather than abandon its plans altogether. We maintain our Hold recommendation for medium risk investors due to the strong balance sheet, cost-cutting measures and more defensive revenue mix.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.