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Ashtead reports record quarterly cash flow despite plunging profits

Last updated: 09:35 08 Sep 2020 BST, First published: 08:06 08 Sep 2020 BST

Ashtead Group -

Ashtead Group PLC (LON:AHT) said profits in the past quarter fell by over a third amid the coronavirus pandemic but it generated record levels of free cash flow.

Revenue of £1.2bn for the construction equipment hire group in the three months to July 31, 2020, was down 6% compared to a year ago.

As long as there is no widespread shutdowns in the US from a significant second wave of COVID-19, the FTSE 100 group’s management expects full-year rental revenue to be fall by “mid to high single digits”, excluding currency swings. 

Profit before tax dropped 38% to £192mln, with underling profit margins of 45.6% compared to 44.2% in the second half of last year.

After reporting record cash flow of £447mln in what was the first quarter of its financial year, the board expects this to top £1bn for the full year.

After a short period of consolidation amid the coronavirus lockdown, chief executive Brendan Horgan said Ashtead had resumed new ‘greenfield’ site openings in the quarter and continues to assess bolt-on site acquisition opportunities.

The board is also mulling the “appropriate time” to resume its share buyback programme alongside its dividend, which was maintained back at the full year results in June. 

The shares were little moved on Tuesday morning at 2,686p, where they are up 12% since the start of the year.

Broker Peel Hunt said PBT was much better than the £180mln it expected though the outlook was largely unchanged, with management guiding to US rental revenue reducing between 5-9%.

The UK is expected to be broadly flat "which has positive read through for other UK rental names". 

With the shares down 1% since February, analysts at Liberum said "while we agree that the market is right to be encouraged by resilience of earnings in the lockdown, we worry that the outlook for US commercial construction may be impacted in the aftermath of the Covid-19 outbreak – a new infrastructure bill could compensate for any commercial decline".

   --Adds share price and broker comment--

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