Proactive Investors - Run By Investors For Investors

Ashtead hikes dividend as strong US revenue lifts profits

Chief executive Brendan Horgan said the board "continues to look to the medium term with confidence"
Ashtead has been involved in the clean-up efforts following hurricanes in the US

Equipment rental firm Ashtead Group PLC (LON:AHT) hiked its full-year dividend by 21% as growth in US revenue led profits higher.

Underlying pre-tax profit rose 17% to £1.1bn and total rental revenue gained 18% to £4.1bn in the year to the end of April 2019, supported by an increase in the fleet of equipment.

READ: Ashtead Group reveals revenue and profit growth but spending is at top end

The group’s involvement in the clean-up efforts following hurricanes Florence and Michael in the US contributed estimated incremental rental revenue of US$30-35mln but this was much less than the previous year’s US$100mln.

The US Sunbelt business was the key driver of growth with rental revenue rising 22% to £3.5bn.

Rental revenue from the A-Plant arm in the UK edged up 2.7% to £416mln while the Sunbelt Canada division delivered a 54% increase in rental revenue to £167mln. 

The earnings (EBITDA) margin rose to 44.3% from 43.8%, driven by an improvement in Canada.

Capital expenditure in 2020 to be in line with prior year

Capital expenditure for the year amounted to £1.6bn gross or £1.4bn net of disposal proceeds and Ashtead expects a similar level of spending in the 2020 fiscal year.

During the period, the company spent £622mln on bolt-on acquisitions, compared to £392mln last year, adding 146 locations across the group.  

“We continue to experience strong end markets in North America and are executing well on our strategy of organic growth supplemented by targeted bolt-on acquisitions,” chief executive Brendan Horgan said.

He added: “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.”

Share buyback plans confirmed 

The company proposed a final dividend of 33.5p, taking the total payout for the year to 40p, up 21% on last year.

Ashtead confirmed plans for a new share buyback programme of at least £500mln in 2020, having spent £675mln on share buybacks since December 2017.

“With our business performing well and a strong balance sheet to support our plans, the board continues to look to the medium term with confidence,” CEO Horgan said.

In morning trading, shares ticked up 0.7% to 1,976p. 

Liberum keeps 'buy' rating 

Liberum maintained a 'buy' rating and target price of 2,390p.

"The market should be relieved that growth has continued without interruption in the fourth quarter, with management expressing confidence in end markets in the US now and into the medium term," it said. 

"The shares still look cheap, having only recovered half of the macro-drive sell-off of late 2018."


-- Adds share price and broker comment --



View full AHT profile View Profile

Ashtead Group Timeline

December 11 2018

Related Articles

Online payment
June 12 2019
The company's payment services specialise in card-not-present transactions, payments made without face-to-face contact or verification, usually online or via mobile
drill rig
June 27 2019
Fleet numbers around 91 rigs currently, which the company estimates is among the youngest in the industry.
May 31 2019
"Stobart Group has a clear focus on developing infrastructure assets in the aviation and energy sectors," chief executive Warwick Brady said.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use