14th Jun 2016 08:34
LONDON (Alliance News) - Shares in Ashtead Group PLC fared better than most in a Brexit-hit broader London market early Tuesday, as the equipment rental firm announced a share buyback and also substantially raised its dividend following growth in profit and revenue in the year to the end of April.
Shares in the company were down 0.3% to 954.50 pence on Tuesday, a relatively strong performer in the FTSE 100 index, itself down 1.1%.
Ashtead said it will start a GBP200.0 million share buyback in the 2017 financial year. This comes in addition to a final dividend of 18.5 pence, which means its total dividend payout for the year rises 48% to 22.5p from 15.25p the year before.
The growth in the returns to shareholders was driven by pretax profit for the financial year to April 30 rising 24% year-on-year to GBP616.7 million from the GBP473.8 million made a year earlier, as Ashtead benefited from a rise in revenue to GBP2.55 billion from GBP2.04 billion.
Underlying pretax profit, stripping out one-offs, was GBP645.3 million, well ahead of the GBP620.0 million expected by analysts. Revenue also was slightly ahead of the GBP2.52 billion anticipated and the full-year dividend was above the 20.0p forecast by DividendMax.
Revenue was driven higher by the beneficial impact of a stronger dollar, given Ashtead's significant exposure to the US market through its Sunbelt division, and by robust markets throughout the year.
The growth in profit was also helped by the group's earnings before interest, tax and amortisation margin expanding to 29% from 27%, driven by operational efficiencies in its US and UK businesses. The strong margin performance, in addition to a "natural moderation" in replacement fleet spending for the group means the company is "entering a phase where we anticipate both good earnings growth and significant free cash flow generation," said Chief Executive Geoff Drabble.
Sunbelt revenue was up 19% for the year, helped by higher sales of used equipment, which offset lower ancillary revenue. Revenue for A-Plant, the group's UK business, was up 11% within a competitive marketplace.
Ashtead's capital expenditure for the year was GBP1.2 billion, up on the GBP1.1 billion it spent a year earlier, while its return on investment was flat at 19%.
"We continue to deliver on our well-established strategy of organic growth, supplemented by bolt-on acquisitions. We have broadened both our geographic footprint and the markets we serve and the benefits of this diversification are evident, both in our financial performance and our market share gains," said Drabble.
Over the course of the year, Ashtead spent USD81.0 million on bolt-on deals in the US and Canada
"We have seen a good seasonal upward trend in fleet on rent throughout the spring which has continued into the new financial year. Our end markets remain strong, the structural drivers are still in place and we have a strong balance sheet which allows us to execute our plans responsibly. As a consequence, the board continues to look to the medium term with confidence," he added.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Ashtead Group