TOP NEWS: Ashtead lifts annual outlook after strong first quarter

(Alliance News) - Equipment rental firm Ashtead Group PLC on Thursday posted a first-quarter ...

Alliance News 16 September, 2021 | 9:13AM
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(Alliance News) - Equipment rental firm Ashtead Group PLC on Thursday posted a first-quarter earnings hike and upped its annual outlook.

Shares in Ashtead were trading up 2.7% at 6,014.00 pence each in London on Thursday morning, the fifth top FTSE 100 performer.

Ashtead tipped its full-year results to be ahead of earlier expectations after a "strong quarter with clear momentum".

In the financial first quarter ended July 31, revenue rose 21% to USD1.85 billion from USD1.51 billion a year earlier. In comparison, during the first quarter of 2019 the company reported revenue of GBP1.28 billion - or around USD1.77 billion at current exchange rates.

Quarterly rental revenue alone rose 22% year-on-year to USD1.67 billion from USD1.35 billion.

Pretax profit, meanwhile, surged to USD415.8 million, up 74% from USD240.6 million the year before. The company reported profit before tax of GBP304.7 million - or around USD421.5 million - during the same period in 2019, prior to the pandemic.

"The group delivered a strong quarter with rental revenue up 22% over the prior year, but more importantly up 12% when compared with the first quarter of 2019-20, both at constant currency. This reflects continued market outperformance across the business," Chief Executive Brendan Horgan said.

"In the quarter, we invested USD551 million in capital across existing locations and greenfields and USD123 million on five bolt-on acquisitions, adding a combined 29 locations in North America. This investment takes advantage of the ongoing structural growth opportunity that we continue to see in the business," Horgan added.

Looking to the full financial year, Ashtead raised group rental revenue guidance. It now expects rental revenue climb of 13% to 16%, up markedly from the previously expected growth of 6% to 9%.

The company also said it expects gross capital expenditure to reach between USD2.0 billion and USD2.3 billion in the full-year, up from prior guidance of USD1.9 billion to USD2.2 billion.

Free cash flow is now predicted to sit somewhere between USD900 million and USD1.1 billion in financial 2022, compared to previous guidance of USD800 million to USD1.1 billion.

"Ashtead is a textbook cyclical company," commented Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown. "Renting out industrial and construction equipment means when the economy grinds to halt, so does Ashtead's business. That's partly why the numbers look so flattering this quarter against the very tough conditions of last year."

She added: "The group hasn't avoided the supply chain issues which are being felt across the globe. An inability to get its hand on new equipment as planned means the average age of the fleet has increased slightly. This is by no means a huge cause for concern, but will become more problematic if it's a trend that doesn't reverse sooner rather than later."

By Scarlett Butler; scarlettbutler@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Ashtead Group PLC 3,668.00 GBX -4.30

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