8th Mar 2022 18:29
(Alliance News) - Ashtead Group PLC is not immune to the dangers posed by rising energy and commodity prices, despite the equipment rental firm raising guidance for the current financial year.
Ashtead said on Tuesday third quarter rental revenue grew 25% on the previous year and as a result, the company raised its annual guidance.
In the three months that ended January 31, the company's financial third quarter, Ashtead reported revenue of USD2.0 billion, up 23% from USD1.62 billion in the previous year. Core rental revenue rose by even more, increasing 25% to USD1.82 billion from USD1.45 billion.
The London-based company explained that rental revenue growth had been driven by volume, with a larger fleet and improved utilisation.
Pretax profit was USD393 million, up 38% from USD284 million year-on-year.
Earnings before interest, tax, depreciation and amortisation in the quarter totalled USD876.9 million. This represented a 21% increase from USD726.3 million.
Looking forward, Ashtead said it expects its full-year results to be slightly ahead of its previous expectations. The company raised its rental revenue growth expectations to between 20% to 22% from 18% to 20%. It said the business is performing strongly despite "supply chain constraints, inflation and labour scarcity".
Ashtead generates more than 80% of its earnings in the US through its Sunbelt business.
Hargreaves Lansdown's Laura Hoy commented: "Ashtead hasn't managed to escape inflationary headwinds completely, though. The group's plagued by the same rising cost issues as just about everyone else on the planet right now. Difference is, Ashtead's in a strong spot to navigate these obstacles with both demand and its own pricing on the rise.
"A big part of Ashtead's growth is reliant on strength in the US economy, though, which is heavily dependent on consumer spending. With inflation on the rise there's a chance that consumers start to pull back, which could throw a wrench in Ashtead's plans."
By Arvind Bhunjun; [email protected]
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