Interactive Investor

ii view: rental company Ashtead hits all-time high

8th December 2020 16:14

Keith Bowman from interactive investor


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Raising its profit forecast and maintaining the dividend has forced investors to take a closer look.

Second-quarter results to 31 October 2020

  • Rental only revenue down 1% to £1.22 billion 
  • Pre-tax profit down 7% to £330 million
  • Interim dividend unchanged at 7.15p per share
  • Net debt down 10% to £4.7 billion


  • Now expects full-year results ahead of its previous expectations

Chief executive Brendan Horgan said:

"I am delighted to report a strong quarter of market outperformance across the business. This performance illustrates the successful execution of our long-term strategy, which we embarked upon after the last recession, to broaden and diversify our end markets and strengthen our balance sheet.  This positioned us to capitalise on our ever-increasing scale, while remaining agile, particularly during these unprecedented times.  

"Looking forward, the strength of our business model and balance sheet positions the Group well in markets that are likely to remain uncertain.  Based on our half year performance and assuming no further significant adverse impact on our business resulting from the Covid-19 pandemic, we now expect full year results ahead of our previous expectations."

ii round-up:

Equipment hire company Ashtead Group (LSE:AHT) today raised its full-year profit expectations as rental demand under the pandemic improved.

Rental only revenue fell by 1% year-over-year compared to an 8% fall in the prior first quarter, helped by the supply of equipment to hospitals, alternative care facilities and testing sites during the Covid crisis. 

Ashtead shares rose by more than 5% in UK trading, having more than doubled since pandemic induced lows in late March. Shares for smaller rival Speedy Hire (LSE:SDY) are up around 60% over the same period. 

Other emergencies across the US, including wildfires in the west and an active storm season also feed into the mix. US rental revenue fell by 3% compared to a fall of 8% in the prior second quarter. The US accounts for over 85% of total group sales. 

Performance in the UK was also aided by sales to the Department of Health, while demand from the TV and film industry assisted its Canadian business. 

Ashtead maintained the half-year dividend at 7.15p per share having paid an unchanged final 2019 payment of 33.5p per share. 

Previously reduced capital expenditure and costs helped generate record first-half cashflow of £822 million, which it used to cut debt down to £4.7 billion from a previous £5.24 billion. 

Third-quarter results are scheduled for 2 March. 

ii view:

Ashtead is an equipment rental hire company which trades under the Sunbelt brand in the US, Canada and now the UK.  Employing over 18,000 people, it rents a full range of construction and industrial equipment across a wide variety of applications to a diverse customer base. 

For investors, outlook uncertainty relating to Covid-19 has not yet been removed, while the significant jump in the share price since late March may mean that much of today’s good news is already in the share price. That said, the pandemic has helped underline the diversity of its customer base, as health related demand has compensated for some construction easing, while strong cashflow has brought group net debt down to within the lower half of management’s target range. In all, while some caution looks sensible, long term investors are likely to take further confidence from these latest results.   


  • Market share in many US regions still has room to grow
  • Dividend payment maintained (not guaranteed) 


  • High dependency on US business 
  • Accounting changes saw net debt up 43% over the last financial year

The average rating of stock market analysts:


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