Covid-19 impact has increased over last 10 days, Ferguson warns shareholders

Heating and plumbing products giant Ferguson has warned shareholders that the impact of coronavirus has “significantly increased” in the last 10 days.

The business said that its revenue was not materially hurt by the pandemic in the period leading up to the end of March. However, revenue growth had weakened at the end of the period.

The business is still pushing ahead with plans to cut ties with the UK, where it operates as Wolseley. The demerger is still on track to be completed this year, but will “require market conditions to normalise by the latter part of the year.”

On Wednesday the board laid out a plan to move its listing from the London Stock Exchange to a US market.

“The board believes that the US is the natural long-term listing location for Ferguson,” it said in a statement.

It will be done in a two-stage process, the board announced.

When the Covid-19 pandemic has calmed enough to allow it, shareholders will be asked to approve a second listing in the US, letting investors buy shares in Ferguson in both the US and the UK.

However, the board said, the long-term plan is to quit the UK entirely, and its shareholders will later be asked to vote a second time to move its primary listing to the US.

Chairman Geoff Drabble said: “We believe that ultimately achieving a US primary listing remains the right outcome for our business as a domestic US value added distributor.

“Consequently, after a period of transition, the Board intends to hold a further shareholder vote to change the primary listing to the US. We believe this process presents the most orderly and equitable path to achieving this aim.”

This way some investors, who are unable or unwilling to hold shares in the US, will be given time to sell off their holdings, Ferguson said.

Growth at the business’s US arm had been accelerating in February and March, until the last 10 days, when authorities started to react.

New York, which has been the country’s worst-hit area, has performed poorly for the business. But many revenue trends have continued to largely hold up in many other regions.

In Canada most of the markets Ferguson operates in are in lockdown and the UK situation is “extremely challenging,” the company said.

It is still providing essential services in both areas.

Chief executive Kevin Murphy said: “Ferguson is a strong and resilient business and our business model remains attractive and cash generative. We are taking appropriate actions on cost and cashflow given the uncertain near-term trading outlook.”