Ashtead Group plc (LON:AHT) have seen a strong performance in North America within a solid third quarter update.
The equipment provider told the market that organic growth within North American markets led to a 8% growth in rental revenue.
The Chief Executive commented:
“We have enjoyed another quarter of industry-leading rental revenue growth, resulting in an increase in rental revenue of 12% in the nine months and an increase in underlying earnings per share of 11%, excluding the impact of IFRS 16, both at constant exchange rates.”
The FTSE 100 listed firm said that revenue was £1.12 billion across the three month period which ended on January 31. Notably, the figure increased from £1.05 billion on a like for like basis. This growth led to a 11% rise in total revenue to £1.25 billion.
Rental revenue also rose 12% to £3.57 billion whilst total revenue spiked 13% totaling £3.93 billion.
Ashtead noted that subsidiaries Sunbelt US and Sunbelt Canada delivered 13% and 29% rental only revenue growth – whilst the UK market division saw revenues decrease by 1%.
On an overall basis, third quarter pretax profit fell 1% to £225 million, whilst operating profit saw a 6% boos to £297 million.
Chief executive, Brendan Horgan, concluded:
“Our North American end markets remain supportive and we continue to execute well on our strategy of organic growth supplemented by targeted bolt-on acquisitions in a moderating growth environment. This strategy reflects the structural growth opportunity we see in the business as we broaden our product offering, geographic reach and end markets. In contrast, the UK market remains challenging and we are therefore refocusing A-Plant on leveraging its platform to deliver long-term sustainable results, while generating strong cash flow.
We remain focused on responsible growth. Our increasing scale and strong margins are delivering growing earnings and significant free cash flow. This provides significant operational and financial flexibility, enabling us to invest in the long-term structural growth opportunity and enhance returns to shareholders, while maintaining leverage within our target range of 1.5 to 2.0 times net debt to EBITDA excluding IFRS 16.
In North America our business continues to perform well in supportive end markets, while in the UK we have taken decisive strategic action to refocus the business in the challenging market conditions. Although construction markets are moderating, we expect results to be in line with expectations and the Board continues to look to the medium term with confidence.”
Shares in Ashtead trade at 2,372p (-1.45%). 3/3/20 10:59BST.