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TOP NEWS: Ashtead shares fall on forecast drop despite strong half

20th Nov 2023 09:18

(Alliance News) - Ashtead Group PLC on Monday said it expects to report "record results" for its latest half year, but said lower operational activity across sectors has affected performance in the latest quarter.

Shares in FTSE 100-listed Ashtead fell 12% to 4,630.00 pence each in London on Monday morning.

Ashtead expects to report "record results" for the half year and second quarter that ended on October 31.

The London-based industrial equipment rental company anticipates rental revenue growth of 13%, and adjusted pretax profit growth of 5% to around USD1.31 billion from USD1.24 billion in the first half of 2022.

Ashtead also expects earnings before interest, tax, depreciation and amortisation to increase 15% to approximately USD2.58 billion, from USD2.25 billion the prior year.

Ashtead said the anticipated strong growth was thanks to strong execution on its 'Sunbelt 3.0' strategic growth plan, and noted "robust end markets, ongoing structural drivers and a record operating performance."

However, Ashtead also said revenue late in the second quarter and into the third was hit by lower emergency response activity, due to a quieter hurricane season and fewer naturally occurring events like wildfires. Also in both quarters, its Film & TV business was impacted by the recent actors' and writers' strikes.

Ashtead consequently revised its full-year guidance downwards. It now expects group and US rental growth between 11% and 13%, compared to prior guidance of 13% to 16%. This will cause Ebitda to be between 2% and 3% below market expectations.

Additionally, Ashtead said adjusted pretax profit will fall below market expectations due to a depreciation charge of around GBP2.12 billion, and a net interest cost of around GBP540 million.

Capital expenditure guidance, meanwhile, remains unchanged at between USD3.9 and USD4.3 billion.

"Despite these one-off events impacting the current financial year, our end markets in North America remain robust, supported in the US by an increasing number of mega projects and recent legislative acts," Ashtead said. "This, combined with the substantial structural growth opportunities that we see for the business, enables the board to look to the future with confidence."

By Emma Curzon, Alliance News reporter

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