Ashtead currency concerns and exec exit take shine off swelling profits

Oliver Gill
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Ashtead's plant is in high demand in the US (Source: Getty)

Construction equipment lessor Ashtead today refrained from hiking its full-year guidance, despite revealing bumper third-quarter profits.

Shares dipped six per cent as underlying earnings per share jumped by 52 per cent in the three months to January 2018.

Nine-month rental sales totalled £2.6bn, up 21 per cent. Profit before taxation was 24 per cent higher at £742m.

The FTSE 100 firm also unexpectedly announced finance chief Suzanne Wood will step down at the end of March. She will be replaced by group treasurer Michael Pratt.

Ashtead's equipment has been in high demand in the US as contractors clean up the wave of devastation left by Hurricanes Harvey, Irma and Maria.

But boss Geoff Drabble said the weakening of the dollar provided the Ashtead with a continued "headwind".

"[But] we expect this to be mitigated by the strong underlying performance in North America. Therefore, we anticipate full-year results to be line with prior expectations," he said.

Read more: Perfect storm: Hurricane cleanup operations boost Ashtead


Hargreaves Lansdown equity analyst Nicholas Hyett said Drabble's decision not to up guidance was "disappointing".

"Management caution seems to be driven by conditions in the foreign exchange markets."

"Now it’s the dollar looking wobbly, and that’s creating headwinds since Ashtead’s dollar profits are no longer worth as much in sterling terms."

Currency fluctuations and Wood's exit explained an "unenthusiastic response" from investors, Hyett added.

RBC analyst Andrew Gibbs said: "This is another impressive quarterly result from Ashtead... Given this is its quietest quarter, these results demonstrate the strong momentum in this business in our view."

Read more: Ashtead's annual profit jumps as demand grows in key North American market

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