- Second year of falling profits
- Record rental revenue
- Strong free cash flow
Equipment hire group Ashtead (AHT) reported a 7% drop in operating profit for the year to April, despite clocking up record rental revenue of $9.98 billion, due to lower utilisation rates and second-hand equipment sales.
Shares in the FTSE 100 company fell in morning trading, before edging higher at lunchtime, although they are still down around 20% over the last year and 12% since 1 January.
The company said it was on track to move the group’s primary listing to the US in the first quarter of 2026 and change its name to Sunbelt Rentals.
RECORD YEAR
Chief executive Brendan Horgan commented: ‘The Group delivered record full-year rental revenue and adjusted EBITDA, (earnings before interest, tax, depreciation, and amortisation) with growth of 4% and 3% respectively.
‘We demonstrated the through-cycle, cash-generative power of our business, delivering near record free cash flow of $1.8bn for the year.
‘Combined with sustained levels of profitability, this enabled us to invest $2.4bn of capital in our growth runway, alongside our highest ever level of shareholder returns totalling $886m across dividends and share buybacks.’
Looking ahead, the company said it expected to deliver rental growth in constant currencies in the range of zero to 4%, gross capital expenditures between $1.8 billion and $2.2 billion and free cash flow in the range of $” billion to $2.3 billion.
The firm’s progressive dividend policy resulted in the board’s decision to recommend a final payout of $0.72, taking the annual dividend to $1.08, representing a 3% increase.
AJ Bell investment director Russ Mould commented: ‘It may have endured a sticky spell over the last 12 months but one area in which Ashtead has regularly delivered for shareholders is on dividends.
‘Analysts are tentatively forecasting a modest increase in underlying pre-tax income for the year to April 2026, but they may want to see an improvement in headline indicators such as the purchasing managers’ index for manufacturing, housing starts and a few more besides before they get too excited.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Martin Gamble) and the editor (Ian Conway) of the article owns shares in AJ Bell.