Little relief for Ashtead

The trouble is that there's little sign of that much needed improving market. Ashtead specialises in renting equipment out for use in housebuilding, facilities and traffic management, and the bulk of the group's revenue is generated from the US Sunbelt operation. But sales there slumped 23 per cent to £355.4m in the period, while operating profits halved to £49.3m. And the picture was no better in the smaller UK operation, A-Plant - turnover there fell 29 per cent to £84m, while operating profit shrank from £14.2m to just £3.1m.

Steps to counter that fall in demand have included a sharp decrease in overall operating costs, which fell from £383.2m to £297.1m. While a lower debt pile meant that the net financing cost dropped 11 per cent to £29.6m. Capital expenditure was also drastically pruned, falling from £201.5m a year earlier to just £28.5m - most of that much reduced figure reflected spending on rental fleet replacement. All of this helped to improve the company's net cash flow, which rose from £19m to £97m, and £89m of that was used to repay debt. So, despite a sharp 74 per cent fall in underlying group operating profits, Ashtead has managed to keep net debt at 2.9 times cash profits - within the group's two to three times target range.

Looking ahead, the second half is usually the tougher of the two as demand for equipment falls during the winter months. However, there are hopes that the US economic stimulus package will help to underpin growth in construction, although there is unlikely to be much sign of this until after the winter months.

UBS is forecasting full-year cash profits of £63.9m and EPS of 0.59p (2009: £155m/11.45p).

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