(Alliance News) - Ashtead Group PLC on Tuesday increased its total dividend for financial 2020, as it expressed confidence in the strength of its balance sheet despite the market turmoil caused by Covid-19.
Shares in the company were up 17% at 2,800 pence each on Tuesday morning, the top performer in the FTSE 100 index.
For the year to the end of April, the London-based equipment rental firm recorded a 7% drop in pretax profit to GBP982.8 million from GBP1.06 billion the year before. This was due to a rise in total operating costs to GBP2.68 billion from GBP2.39 billion as well as an increase in depreciation to GBP1.09 billion from GBP843.0 million.
On an underlying basis, pretax profit was down 4% to GBP1.06 billion from GBP1.11 billion.
Earnings before interest, taxes, depreciation and amortisation increased by 5% to GBP2.38 billion from GBP2.11 billion the prior year. This was on total revenue that increased by 9% to GBP5.05 billion from GBP4.50 billion.
Rental revenue rose 8% year-on-year to GBP4.61 billion from GBP4.14 billion.
Segmentally, Ashtead's core Sunbelt US division recorded revenue of GBP4.34 billion, up 14% from GBP3.82 billion the prior year. Sunbelt Canada also grew by 24% year-on-year to GBP248.7 million, however, Sunbelt UK declined by 1.2% to GBP469.2 million due to a competitive environment.
Ashtead declared a final dividend of 33.5p per share, bringing its total payout for financial 2020 to 40.65p, up 1.6% from 40.0p the year before.
However, in order to optimise its cash flow in response to the Covid-19 pandemic, the company has reduced its capital expenditure for financial 2021, suspended all merger & acquisitions activity and paused its share buyback programme.
During financial 2020, Ashtead spent GBP449 million on share repurchases. Looking ahead, Ashtead expects its capital expenditure to be around GBP500 million for the year ending April 30, 2021.
"While no one could have foreseen the global impact of Covid-19, our business model and capital structure are designed to withstand the cyclical nature of some of our end markets. We took prompt actions to optimise cash flow, reducing capital expenditure and operating costs, and strengthen further our liquidity position," said Chief Executive Brendan Horgan.
"Looking forward, I am certain these swift actions combined with the strength of our cash flow and balance sheet will serve the group well. The diversity of our products, services and end markets coupled with ongoing structural change opportunities put the board in a position of confidence to look to the coming year as one of strong cash generation and strengthening our market position," Horgan added.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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Ashtead Group (AHT)