Ashtead falls on US fears despite surge in profits

Suzie Neuwirth
FTSE 250-listed equipment rental firm Ashtead’s first-quarter results were ahead of analysts’ expectations, but its heavy exposure to the US construction market led its share price to plunge over five per cent yesterday.

Ashtead, which makes the vast majority of its revenues from the US, particularly its Sunbelt Rentals business, posted a 59 per cent rise in pre-tax profits to £99.5m and a 24 per cent increase in revenues to £410.5m compared to the first quarter of 2012.
The company’s shares closed 5.3 per cent lower at 651p.

“As the bulk of its revenues are from the US, Ashtead is very sensitive to investor outlook on the US macro recovery, and concerns about US construction activity,” Justin Jordan, equity analyst at house broker Jefferies, told City A.M.

Sunbelt’s rental revenue grew 25 per cent to $479m (£306m) over the period, resulting in a record first-quarter earnings margin of 46 per cent.

“Our focus remains on organic growth with £279m of capital expenditure in the first quarter,” said chief executive Geoff Drabble.

“Whilst we continue to invest significantly in the business, our strong margins allow us to do this while delivering.”

Drabble added that Ashtead now expects a full-year result ahead of its previous expectations.

The firm also said that it had increased its senior debt facility to $2bn during the quarter and extended its maturity to August 2018 at a lower cost.