Tuesday 18 June 2019 8:48 am

Ashtead raises dividend after strong US performance

Ashtead hiked its dividend today after posting a 20 per cent rise in full-year profits thanks to a strong performance in the US.

Read more: Net debt rises at Ashtead

The figures

Revenue rose 19 per cent year on year to £4.5bn for the year to the end of April, the UK equipment rental company said.

Meanwhile profit before tax grew 20 per cent to break through the billion-pound barrier at £1.06bn, up from last year’s £862m.

However, earnings per share fell 17 per cent year on year to 166.1p after Trump’s tax cut bolstered last year’s 195.3p figure.

Nevertheless, Ashtead raised its final dividend to 33.5p per share, bringing its total dividend for the year to 40p per share, 21 percent higher than 2018’s 33p.

Why it’s interesting

The US Sunbelt business drove Ashtead’s growth, seeing rental revenue grow 22 per cent to £3.5bn.

Meanwhile revenue from Ashtead’s UK A-Plant division grew 2.7 per cent to £416m, while its Sunbelt Canada business posted a 54 per cent rise in revenue to £167m.

Analysts at Liberum advised investors to buy Ashstead’s shares, saying: “The market should be relieved that growth has continued without interruption in Q4, with management expressing confidence in end markets in the US now and into the medium term.

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

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What Ashtead said

CEO Brendan Horgan said:

“The group delivered a strong quarter with good performance across the business.  

“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.

“We remain focused on responsible growth. Our increasing scale and strong margins are delivering good earnings growth and significant free cash flow generation.

Our business continues to perform well in supportive end markets.  Looking forward, we anticipate a similar level of capital expenditure in 2019/20, consistent with our strategic plan.  So, 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.”