(Alliance News) - Ashtead Group PLC on Tuesday reported a sharp drop in profit in the third quarter of its financial year, saying rental revenue growth in the key US market was hurt by fewer natural disasters requiring emergency response, and by the strike by actors and writers in Hollywood.
Shares were down 7.5% to 5,298.00 pence early Tuesday in London. The wider FTSE 100 index was down just 0.2%.
London-based Ashtead provides equipment hire and makes by far the most of its money in the US via its Sunbelt arm.
Ashtead reported pretax profit of USD442.0 million for the three months that ended January 31, down 12% from USD505.1 million a year before. On an adjusted basis, excluding amortisation, pretax profit was USD473.0 million, down 11% from USD534.7 million.
Total revenue was USD2.66 billion, up 9.5% from USD2.43 billion, as rental revenue rose by 9.4% to USD2.36 billion from USD2.19 billion.
For the first nine-months of Ashtead's financial year, pretax profit was flat at USD1.69 billion, while revenue rose by 14% to USD8.23 billion from USD7.22 billion.
For the lower profit in the third quarter, Ashtead cited a higher depreciation charge relative to revenue growth due to lower utilisation of a larger fleet of equipment. It also paid higher financing costs.
Looking ahead to the full financial year, Ashtead expects rental revenue growth at the low end of its previously guided range of 11% to 13%. This reflects a lower outlook for Canada, where Ashtead now expects 11% to 13% growth, the same as in the US and overall, down from 14% to 16% previously.
However, Ashtead said it expects overall results for financial 2024 to be "broadly in line with expectations".
By Tom Waite, Alliance News editor
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Ashtead Group (AHT)