18th Jun 2024 09:59
(Alliance News) - Ashtead Group PLC's results gave investors little "to get excited about", though no mention of a listing move calmed speculation on that front, giving London some respite for now.
The stock traded 3.9% lower at 5,296.00 pence each in London on Tuesday morning, the worst FTSE 100 performer.
In the financial year that ended April 30, the London-based provider of equipment hire said pretax profit fell 2.1% to USD2.11 billion from USD2.16 billion. This came despite a 12% increase in revenue to USD10.86 billion from USD9.67 billion.
Profitability was dented by higher interest expenses, reflecting higher interest rates and an increased average debt level. Interest expenses were 48% higher at USD546.3 million compared with USD368.8 million a year prior. Net debt at April 30 was USD10.66 billion, up from USD8.96 billion a year before.
Ashtead said US revenue, the majority of its business, rose 13% to USD9.31 billion from USD8.22 billion, with rental revenue up 11% to USD8.32 billion from USD7.50 billion.
Canada's rental-only revenue increased 10% and the UK business generated rental-only revenue growth of 9%.
Ashtead proposed a final dividend of 89.25 US cents per share, up 5.0% from 85.0 cents. Its annual dividend totalled 105.0 cents, also rising 5.0% from 100.0 cents.
Looking ahead, Chief Executive Brendan Horgan said: "Our end-markets in North America remain robust with healthy demand, supported in the US by the increasing number of mega projects and recent legislative acts. We are in a position of strength, with the operational flexibility and financial capacity to capitalise on the opportunities arising from these market conditions and ongoing structural changes."
For the new year, Ashtead expects rental revenue growth of 5% to 8% at constant exchange rates, slowing from a 10% rise in the year just ended.
Hargreaves Lansdown analyst Matt Britzman commented: "Ashtead’s markets are slowing. Hot off the heels of news that it may be looking to move its main listing to the US, this was a slightly soft set of results. Whether you look at revenue, profit, or guidance, it’s hard to see much for markets to get excited about here. Management would be forgiven for giving slightly conservative guidance for the coming year after several disappointments of late, and it looks like that’s the case."
Earlier in June, the Telegraph reported that Ashtead is eyeing a move across the pond, in what would be a fresh blow to the London Stock Exchange. The firm makes most of its money in the US via its Sunbelt arm.
The Telegraph reported that the company is in the early stages of considering whether to switch its stock market listing from the UK to the US, which is where the vast bulk of its business is generated.
XTB analyst Kathleen Brooks noted Ashtead's annual results showed a "toxic mix" of slowing growth and tepid guidance. But there was good news for those hoping the firm sticks around on the London market.
"The upside is that the company did not mention anything about moving its listing to the US, where it does the bulk of its business. Prior to these earnings, the market had thought that it would follow the likes of Flutter and dual list its shares on the US market," Brooks added.
A possible Ashtead departure would be the latest in a string of exits the Square Mile has suffered in recent times.
Flutter Entertainment PLC, which has a large US business via the FanDuel, TVG and PokerStars brands, moved its primary listing to New York in May.
In September, building material firm CRH PLC shifted its primary listing to New York, giving up its FTSE 100 status in the process.
By Eric Cunha, Alliance News news editor
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