Shares in hire group Ashtead jumped to a 52-week high, after strong trading in the US pushed group underlying operating profits up a quarter year-on-year to £65.7m and currency adjusted earnings per share rose 39 per cent.
The US saw rental revenues accelerate in the second quarter, pushing the growth rate for the half to 4 per cent despite a 14 per cent decline in the core non-residential construction market. That offset continued weakness in the UK business, A-Plant, which saw revenue fall despite a 2 per cent increase in rental volumes. However, the pressure on yields began to moderate throughout the period so, despite being 5 per cent lower in total, they were only 2 per cent lower in the second quarter. Revenues were also boosted by higher used equipment sales, as it tripled expenditure in fleet replacement to £96m.
Although the winter is seasonally weaker, the strong trading momentum prompted Ashtead to guide analysts' full-year expectations higher. Broker Peel Hunt believes utlitisation rates will hold steady and support continued pricing improvement - it notes that rental rates are still 18 per cent below their peak and the broker has upgraded its full-year pre-tax profit forecast from £11.7m to £20.9m, giving EPS of 2.7p (2010: £5m/0.3p).
ASHTEAD GROUP (AHT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 154p | MARKET VALUE: | £775m | |
| TOUCH: | 154-155p | 12-MONTH HIGH: | 158p | LOW: 66p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 118 | |
| NET ASSET VALUE: | 101p* | NET DEBT: | 153% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 409 | 18.6 | 2.00 | 0.90 |
| 2010 | 441 | 23.6 | 3.10 | 0.93 |
| % change | +8 | +27 | +55 | +3 |
Ex-div: 19 Jan Payment: 9 Feb *Includes intangible assets of £358m, or 71p a share | ||||
