The election of Donald Trump as the 45th US president ricocheted through financial markets. While the consequences unsettled emerging economies, the developed world's equity indices pushed higher. Following a pledge from the President-elect to plough up to $1 trillion (£0.8 trillion) into upgrading the nation's infrastructure, stocks with exposure to this sector enjoyed a rally in their share price. With the majority of its revenue generated over the pond, Ashtead (AHT) was front and centre.
Regardless of any Trump bounce, the tool hire group is set to deliver an impressive set of results for the full year. While unveiling trading figures for the six months to the end of October, chief executive Geoff Drabble said its 12-month performance will be ahead of market expectations.
In the first half, rental revenue grew by 13 per cent at constant currencies to £1.4bn. The group invested £626m in the rental fleet, towards the upper end of management expectations for the first half. Therefore, full-year capital expenditure guidance for the full year has been raised to between £1bn and £1.2bn.
The US Sunbelt business generated a sales uplift equivalent to £263m and also boosted its cash profit margins to 50.9 per cent, from 48.6 per cent a year earlier. Same-store growth, which to be exact means increasing the fleet size in stores that have been in existence for at least a year, is an important part of the group's long-term expansion. This generated half of the US business's rental sales growth during the period. Meanwhile, 11 bolt-on acquisitions, as well as the addition of 42 new stores, accounted for the remainder.
The UK A-Plant business also put in a good showing, increasing its overall sales to almost £200m and operating profit by 8 per cent. Given management's positive guidance, analysts at Peel Hunt also increased their pre-tax profit and EPS forecasts by 5 per cent. They now expect adjusted pre-tax profit of £790m for the 12 months to April 2017, giving EPS of 102p. This is up from £645m and 84.7p in FY2016.
ASHTEAD (AHT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,560p | MARKET VALUE: | £7.79bn | |
| TOUCH: | 1,560-1,561p | 12-MONTH HIGH: | 1,592p | LOW: 749p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 372p* | NET DEBT: | 145% | |
| Half-year to 31 Oct | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 1.27 | 332 | 43.7 | 4 |
| 2016 | 1.55 | 413 | 54.3 | 4.75 |
| % change | +22 | +24 | +24 | +19 |
Ex-div: 19 Jan Payment: 8 Feb *Includes intangible assets of £828m, or 166p a share | ||||
