Ashtead shares were down 1% to 3,762p in early morning trading on Tuesday after a reported 19% revenue growth to $8 billion, reflecting a 22% climb in rental revenue and growth across all regions.
The company commented that the revenue increase fed into a 38% rise in underlying pre-tax profit to $1.8 million, which was helped by saving efforts, despite higher levels of activity bringing back some previous costs.
Ashtead mentioned an estimated rental revenue rise of 12% to 14% in the coming year, with growth in the US and Canada projected to offset a decline in the UK as pandemic-related medical demand subsides.
“We’re pleased to see Ashtead’s been making hay while the sun shines. But the real progress has been growth in the group’s end markets,” said Hargreaves Lansdown equity analyst Laura Hoy.
“As demand from the healthcare sector starts to wane, Ashtead’s growing position in the US should continue to drive sales in the year ahead.”
The firm reportedly spent $414 million on share buybacks in the year, and announced a 67c final dividend, bringing the total dividend for the term to 80c.
“The group’s had to open its wallet to fund the expansion, but a the balance sheet remains in reasonably strong condition,” said Hoy.
“That’s despite $414m spent on share repurchases this year. Although the group’s approved further buybacks this year, management is unlikely to keep up with this level of repurchases given the pressing need for increased investment in the business.”
“For now all appears to be well at Ashtead, and the inflationary environment’s done little to dull the shine. However with a recession still a very real concern in the group’s largest markets, construction spending could start to shrink which would undo much of this progress.”