Ashtead Group’s pre-tax profit slides 10% in the fiscal second quarter

Ashtead Group plc (LON: AHT) said on Tuesday that its pre-tax profit came in 10% lower in the fiscal second quarter. The company, however, expressed confidence that its annual financial report will be stronger than its own expectations.

Ashtead shares jumped roughly 4% in premarket trading on Tuesday. On a year to date basis, the stock is now about 40% up after more than 150% growth since March, when the COVID-19 restrictions weighed on its business.

Ashtead Group reports £1.35 billion of revenue in Q2

Ashtead Group said that its pre-tax profit in the quarter that concluded on 31^st October printed at £313.8 million. In the same quarter last year, it had reported a higher £355.5 million of profit. Underlying pre-tax profit, the industrial equipment rental company added, contracted to £329.9 million in Q2 versus the year-ago figure of £370.9 million.

Ashtead also said that it generated £1.35 billion of revenue in the recent quarter. In the comparable quarter of last year, it had posted a higher £1.40 billion of revenue. In the prior quarter (Q1), the FTSE 100 listed company had seen a 37% decline in its pre-tax profit, as per the report published in September.

In its previous guidance, the British company had forecast a 5% to 9% decline in group rental revenue this year. But it now expects a narrower, up to 7% decline in group rental revenue in fiscal 2021. The German investment bank, Berenberg, lifted Ashtead’s rating from “sell” to “hold” in November.

Ashtead had noted £4.61 billion of group rental revenue in fiscal 2020. The company also expressed confidence on Tuesday that its performance was better than the market at large in the fiscal first half.  

Ashtead declares 7.15 pence per share of interim dividend

Ashtead’s board declared 7.15 pence per share of interim dividend on Tuesday that remained unchanged on a year over year basis. As per CEO Brendan Horgan:

“Looking forward, the strength of our business model and balance sheet positions the group well in markets that are likely to remain uncertain.”

The London-based company said that it was waiting for the right time to resume share buybacks. Ashtead performed largely upbeat in the stock market last year with an annual gain of more than 40%. At the time of writing, it is valued at £15 billion and has a price to earnings ratio of 23.22.