Ashtead Group, the construction equipment leasing firm, has reported record profits as tight cost control and strong demand in the US helped the firm beat analyst expectations.
In the 12 months to the end of April revenue improved by 20% compared to the previous year, hitting £1,135m, reflecting a strong performance from the US division known as Sunbelt Rentals. The full year figure was just ahead of the consensus forecast of £1,120m.
The revenue growth, cost control, lower net financing costs and several business improvement programmes combined to generate underlying pre-tax profits of £131m compared to just £31m in the prior year and better than the £122.4m the market had been expecting.
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The firm notes that "exchange rate fluctuations did not have a significant effect on year-on-year comparisons."
Ashtead is split into US and British operations. Sunbelt Rentals is by far the bigger outfit, generating revenues of £945.7m against £782.7m in 2010/2011. It is the second biggest company of its type in the United States.
In Britain, Ashtead's operations run under the A-Plant brand, which is the third biggest equipment rental firm in the UK; its revenue contribution was £188.9m versus £165.8m. Interestingly, Sunbelt's margin was 35.9% while A-Plant only achieved 26.2% and that comes in the context of ongoing difficulties in the US construction market.
Ashtead's Chief Executive, Geoff Drabble, said of the results: "We are delighted to report record group profits, encouragingly delivered against a backdrop of end construction markets remaining at historically low levels.
"The momentum we have established, and the flexibility provided by our strong balance sheet, allows us to anticipate further growth with or without end market recovery. As a result, it is likely that our profits in the coming year will be ahead of our previous expectations."
Ashtead shares had risen 6.3% by 8:43. Over the last 10 years the stock has gained 440% in value, the FTSE 100 has risen just 21.4%.
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