Ashtead credits weaker pound for bolstering full-year forecasts
Pre-tax profits for the equipment rental firm jumped by more than 20% to £274.4 million in the first quarter.
The weaker pound has given a leg up to Ashtead Group, with the equipment rental firm now forecasting better than expected full-year results.
It comes as the company reported a 23% jump in pre-tax profits to £274.4 million for the company’s first quarter, covering the three months ending July 31.
That was against revenues of £1 billion, up 22% from a year earlier.
Ashtead’s chief executive Geoff Drabble said it marked a “strong quarter” for the business.
“Our end markets remain strong and are supported by continued structural change as customers rely increasingly on rental while we leverage the benefits of scale.”
He said foreign exchange rates were also working in Ashtead’s favour.
“With the benefit of weaker sterling, we expect full-year results to be ahead of our expectations and the board continues to look to the medium term with confidence.”
Ashtead is now continuing its share buyback programme, first announced last December.
“In line with our capital allocation priorities we have decided to increase and extend our current buyback plans”, Mr Drabble said.
“The level of share buyback will be increased to £125 million per quarter resulting in a total outlay of £675 million under the programme announced in December 2017.
“The programme will be extended for financial year 2019/20 with an anticipated spend of at least £500 million.”
The chief executive also highlighted the firm’s takeover drive, having spent £145 million on bolt-on acquisitions in the first quarter alone.
It snapped up five businesses over the period, including hydraulic attachment rental business Astra Site Services, Canadian equipment rental company Richlock and New Jersey-based industrial power rental firm Wistar.
“Our strong margins and lower replacement capital expenditure are delivering good earnings growth and significant free cash flow generation,” Mr Drabble said.
“This provides us with significant operational and financial flexibility, enabling us to invest in the long-term structural growth opportunity and enhance returns to shareholders while maintaining leverage within our target range.”