(Alliance News) - Ashtead Group PLC on Tuesday said organic growth and supportive North American end markets led to a 8% growth in third-quarter rental revenue.
In addition, the FTSE 100 company said financial 2020 results are set to be in line with expectations, despite moderating construction markets.
The equipment rental company recorded rental revenue of GBP1.12 billion for the three months to January-end, up from GBP1.05 billion a year ago, resulting in a 11% growth in total revenue to GBP1.25 billion. Year-to-date, rental revenue grew 12% to GBP3.57 billion and total revenue was up 13% at GBP3.93 billion.
The company said Sunbelt US and Sunbelt Canada delivered 13% and 29% rental only revenue growth respectively, while A-Plant's rental only revenue decreased 1%, reflecting the more competitive landscape within a more uncertain UK construction market.
Ashtead generates a bulk of its revenue in the US via its Sunbelt unit. The growth in Sunbelt Canada was attributed to recent acquisitions, including William F. White acquired in December 2019.
Third quarter pretax profit dipped 1% to GBP225 million, while operating profit increased 6% to GBP297 million. Pretax profit and operating profit both grew 4% and 6% on a year-to-date basis to GBP885 million and GBP1.07 billion, respectively.
Quarterly earnings before interest, tax, depreciation and amortisation jumped 10% to GBP584 million and by 11% for the first nine months of financial 2020 to GBP1.91 billion.
Ashtead Chief Executive Brendan Horgan said: "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. 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.
"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."
Looking forward to financial 2021, Ashtead anticipates gross capital expenditure of between GBP1.1 billion and GBP1.3 billion, resulting in mid-to-high single digit revenue growth in the US. The company's board continues to look to the medium term with confidence.
Shares in Ashtead were down 1.9% at 2,365.00 pence each in London on Tuesday morning.
By Tapan Panchal; tapanpanchal@alliancenews.com
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Ashtead Group (AHT)