Ashtead profits lift on bumper US performance

Equipment rental firm Ashtead has notched up higher first quarter profits as another bumper performance in the US offset tougher UK trading.

The FTSE 100 listed group reported a 9% rise in underlying pre-tax profits to £319 million for the three months to July 31, with group revenues jumping 22% to £1.3 billion.

Statutory pre-tax profits were 8% higher at £304.7 million.

Its Sunbelt business in the US and Canada drove the performance, thanks to higher rental demand for industrial gear and recent acquisitions in Canada.

US earnings leapt 22% to £352.7 million, while operating profits were 12% higher for Sunbelt in Canada.

But its UK arm – called A-Plant – suffered a 31% plunge in operating profits to £15.4 million as it said the market remained “competitive”.

On the UK, Ashtead said: “After a period of sustained growth for the business, the focus is now on operational efficiency and improving returns.”

Ashtead makes around 90% of its earnings from the US and the remainder largely from A-Plant in the UK.

Brendan Horgan, chief executive of Ashtead, said the group was continuing to make investment and eye “bolt-on acquisitions” to support growth.

He said: “We invested £521 million in capital and a further £196 million on bolt-on acquisitions in the period, which has added 27 locations across the group.

“This investment reflects the structural growth opportunity that we continue to see in the business as we broaden our product offering, geographic reach and end markets, thus increasing market share and diversifying our business.”

Ashtead added it spent £125 million under its share buyback programme in the three months and is set to spend at least £500 million on share buybacks over the full-year.

But shares edged 2% lower after the quarterly figures.

The group’s first quarter figures follow a stellar previous financial year for the firm, when pre-tax profits climbed 10% to £208.6 million on revenues 19% higher at £4.5 billion.

It marked a solid set of results for Mr Horgan’s first time in the hot seat,
having taken over as chief executive in May this year.

He succeeded Geoff Drabble, who retired last month after 12 years with the
business.

Analysts at Jefferies said Ashtead “marches ahead with confidence”.