Ashtead sees upside to full-year forecasts after record Q1 profits
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Equipment rental group Ashtead said it expects to beat full-year expectations after profits jumped by a third to a record high in its first quarter, helped by strong revenue growth and improving margins.
Chief executive Geoff Drabble said that the company, which provides equipment for construction, event management and traffic management, "continue[s] to capitalise on recovering markets".
He said that Ashtead's US and UK divisions of Sunbelt and A-Plant took further market share during the period. Sunbelt and A-Plant are both the second-largest equipment rental businesses in their respective countries.
"As a result of this strong performance, and with a strong balance sheet to support future growth, we now anticipate a full-year result ahead of our previous expectations," Drabble said.
Pre-tax profit totalled £120m in the three months to 31 July, up 33% on the year before, on underlying rental revenues that rose 22% at constant currency to £417.7m.
Ashtead said that its end markets are "clearly now at the early stages of recovery" and grew 8% year-on-year during the quarter. As well as taking further market share, the company said that bolt-on acquisitions and greenfields also contributed to growth.
Rental revenues at Sunbelt rose 22% while A-Plant results grew by 19%.
Group operating margins improved to 46% from 43% at the same point last year.
Ashtead invested £284m in capital expenditure during the quarter, slightly higher than last year, and raised its full-year spending guidance to £825m-875m. The company had previous guided to investment being similar to the £741m spent in the last financial year.
"While we continue to invest heavily in the business, our strong margins allow us to do this while maintaining our leverage discipline," Drabble said.
BC