Ashtead have enjoyed a 18% in revenue in their half year to 31st October as rental demand for their plant hire offering increased.
Rental Revenue increased 20% in the half year period and the group said they now expected earnings to be ahead of previous expectations.
“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,” said Ashtead’s chief executive, Brendan Horgan.
Ashtead also added 58 locations across the United States by means of bolt-on acquisitions.
Analysts pointed to the return to normalisation as we move through the pandemic as a key driver to Ashtead’s performance.
“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,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.
“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.”
Notwithstanding any concerns about future economic uncertainties, investors would have been pleased to hear Ashtead increased their interim dividend by 28% to 12.5 cents.