Ashtead reports strong financial performance as U.S. economy reopens

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jun 15, 2021
  • Ashtead Group's profit jumps more than 100% in the fourth quarter.
  • The equipment rental firm declares 35 pence per share of a final dividend.
  • Ashtead Group is close to 50% up year-to-date in the stock market.

Ashtead Group plc (LON: AHT) said its profit jumped more than 100% in the fourth quarter as the U.S. economy started to reopen after an unprecedented hit from the Coronavirus pandemic. Its revenue also climbed by 23% in Q4.

Ashtead Group’s cash flow soars to a record £1.38 billion

For the full financial year, Ashtead reported £5.03 billion of revenue – a 3% increase from last year. Its annual operating profit came in at £1.13 billion versus the year-ago figure of £1.22 billion.

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The industrial equipment rental company that focuses primarily on the U.S. market said its cash flow soared to a record £1.38 billion in the recent year. In fiscal 2020, it had generated a much lower £792 million of cash flow.

Commenting on the financial update on Tuesday, CEO Brendan Horgan said:

“We returned to growth in the fourth quarter with rental revenue up 15% over last year and up 14% when compared with the fourth quarter of 2018/19, both at constant exchange rates. This completes a year of market outperformance across the business with full-year rental revenue up 1% at constant exchange rates.”

In separate news from the United Kingdom, Bellway plc said its house completions in 2021 are likely to return to the pre-pandemic levels.

Ashtead declares 35 pence per share of a final dividend

Ashtead’s board declared 35 pence per share of a final dividend on Tuesday that pushed the full-year payment up, to 42.15 pence per share. The company had paid 40.65 pence per share last year.

According to the FTSE 100 firm, it spent £125 million on bolt-on acquisitions in fiscal 2021 and invested £718 million of capital in the business. The next phase of its strategic plan, Sunbelt 3.0, launched in April. As per analyst Nicholas Hyett of Hargreaves Lansdown:

“The real stand out feature of full-year results is how flexible Ashtead has proven, despite a relatively fixed operating cost base and deciding not to make any staff redundant. In particular, delaying the replacement of old equipment has boosted free cash flow substantially, allowing the group to trim debt while still making extra acquisitions this year.”

Ashtead tanked 2% on market open on Tuesday but gained more than 3% later on to trade at a per-share price of £52.30 versus £35 per share at the start of the year. At the time of writing, it is valued at £23.22 billion and has a price to earnings ratio of 37.94.

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