Ashtead lifts FY expectations after record first half

Equipment rental firm Ashtead lifted its expectations for the full year as it reported a record first-half performance on Tuesday, hailing momentum across the business.

Adjusted pre-tax profit rose 42% to $979m on revenue of $3.9bn, up 18% on the first half of 2020. Rental revenue was 20% higher at $3.5bn.

The interim dividend was lifted 28% to 12.5 cents per share and Ashtead said it now anticipates full-year results ahead of its previous expectations.

In the US, rental only revenue was 16% higher on the previous year at $2.3bn and 9% higher than in 2019, representing continued market outperformance.

Meanwhile, the UK business generated rental only revenue of £203m, up 18% on the prior year. Ashtead said that while its performance continues to benefit from the company’s essential support to the Department of Health in its Covid-19 response efforts, the core business is performing strongly and is benefitting from operational improvements, with total revenue up 35% to £368m.

Chief executive Brendan Horgan said: "The group's strong performance continues with rental revenue up 20% for the half year over the prior year, but more importantly up 14% when compared with the first half of 2019/20, both at constant currency.

"Our business has strong momentum in supportive markets. The benefit we derive from the diversity of our products, services and end markets, our investment in technology and ongoing structural change, enhanced by the environmental and social aspects of ESG, enables the board to look to the future with confidence. Notwithstanding the volatility that continues to arise from Covid, the fundamentals of our business are strong and we now expect full year performance to be ahead of our previous expectations."

At 0915 GMT, the shares were up 2.5% at 6,354.76p.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "Ashtead’s heavy duty industrial rental equipment fell out of favour during the peak of the pandemic, which is why new results look so spritely in comparison. However it’s been achieved, knocking the lid off full year expectations is good going. As the world, and more specifically, industrial work, has started to resume, Ashtead stands to benefit. Plans to build out other revenue streams have merit, but for now, it’s still the traditional equipment rental business that’s bringing home the bacon.

"The group’s enjoyed favourable market sentiment over the last few months, boosting the valuation in a big way. While the optimism can be understood, it shouldn’t be forgotten that Ashtead is an operationally leveraged business. As a cyclical company, its fortunes wax and wane with the wider economy too, so all-in, there could be some volatility if there are any unwelcome economic surprises."