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Ashtead Says Full-Year To Beat Expectations After Strong First Quarter

September 2, 2014

Steve McGrath

LONDON (Alliance News) - Equipment rental company Ashtead Group PLC Wednesday said it expects its full-year results to be above previous expectations, after a strong first-quarter performance in both its US and UK businesses, driven by new store openings and bolt-on acquisitions, continued into August.

The company also increased its capital expenditure plans for the year as a whole, pledging to continue investing in organic growth thanks to the momentum it is seeing in the business.

Ashtead reported a pretax profit of GBP117.5 million for the three months to July 31, up from GBP97.4 million a year earlier, as revenue rose to GBP457.9 million, from GBP410.5 million.

"As a result of this strong performance, and with a strong balance sheet to support future growth, we now anticipate a full year result ahead of our previous expectations," Chief Executive Geoff Drabble said in a statement.

The company invested GBP284 million in capital expenditure into the business in the quarter and spent a further GBP32 million on bolt-on acquisitions. It said it now expects capital expenditure to be between GBP825 million and GBP875 million in the year as a whole.

"While we continue to invest heavily in the business, our strong margins allow us to do this while maintaining our leverage discipline," Drabble said.

The company's earnings before interest, tax, depreciation and amortisation margin was 46% in the first quarter, up from 43% a year earlier. Its net debt to Ebitda leverage was 1.9 times, down from 2.0 times.

Rental revenue was up 22% in its US construction and industrial equipment rental business, Sunbelt, which has 436 stores in 40 states. Rental revenue at A-Belt, the UK's second-largest equipment rental business with 129 stores, rose 19%.

"Our end markets are clearly now at the early stages of recovery and are up circa 8% year on year. Our ability to capitalise on this opportunity is evidenced by our same-store growth of 17% as we continue to take further market share. In addition, bolt-ons and greenfields have contributed a further 7% growth as we execute our long-term structural growth strategy of expanding our geographic footprint and our specialty businesses," it said.

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Source: Alliance News

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