Ashtead's management believes the equipment rental group has now turned a corner and is laying the foundations for an upturn in construction markets. The last 12 months certainly weren't pretty - underlying group revenues plunged 25 per cent on a constant currency basis, while operating profit fell 58 per cent to £69m, despite a 19 reduction in operating costs.
But fourth-quarter trends "were encouraging", according to chief executive Geoff Drabble, with US-based Sunbelt, the group's largest business, returning to profit growth. What's more, headroom on debt facilities and strong cash flow have given the group confidence to invest £175m this year to replace the rental fleet. This is an increase from a meagre £63m capital spend last year.
The group's smaller UK business, A-Plant, is likely to see little of the investment, though. Uncertainties around government spending will be slightly offset by infrastructure spend, Mr Drabble said, but as a recovery in US construction markets is expected before the year is out this will be the group's focus.
UBS forecasts adjusted pre-tax profits of £8.2m and EPS of 1.05p (£5m and 0.22p in 2010).
Ashtead (AHT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 115p | MARKET VALUE: | £579m | |
| TOUCH: | 114-115p | 12-MONTH HIGH: | 129p | LOW: 52p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 575 | |
| NET ASSET VALUE*: | 99p | NET DEBT: | 166% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 0.64 | 81.7 | 13.5 | 1.50 |
| 2007 | 0.88 | -42.7 | 1.5 | 1.65 |
| 2008 | 1.05 | 110.0 | 12.8 | 2.50 |
| 2009 | 1.12 | 0.8 | 0.4 | 2.58 |
| 2010 | 0.84 | 4.8 | 0.2 | 2.90 |
| % change | -25 | +500 | -50 | +13 |
Ex-div:18 Aug Payment:10 Sep *Includes intangible assets of £374m, or 74p a share | ||||
