Ashtead equipped for a strong Covid recovery
ASHTEAD smashed City forecasts after it picked up extra work supporting first responders, hospitals and testing centres during the pandemic.
The equipment rental firm, which also benefited hugely from being designated ‘essential’ in the US, UK and Canada, said profits fell around a fifth to £506m in the six months to October.
But this included a much bigger than expected recovery during the second quarter and has allowed it to bump up its annual guidance. The revenue from renting out construction equipment and tools such as diggers will still fall. But Ashtead thinks it will be between 3pc to 7pc lower, rather than 5pc to 9pc lower.
It is faring better than many because its services are so diverse. It is the UK’s biggest supplier of traffic cones – and organises the perimeter fence and crowd control at Glastonbury festival.
Though trading is trickier in the US, where it generates about 86pc of its turnover, it has still been able to commit to its 7.15p halfyear dividend in a boost for savers and pensioners who have been deprived of key payouts this year.
Analysts praised the FTSE 100listed firm, with Numis’s Steve Woolf deeming it ‘a very strong set of results’ and RBC saying it was still a ‘big fan’.
Shares closed 2.2pc higher, up 71p, to 3300p, and are up by more than a third this year.
Ashtead outperformed the Footsie, which was treading water as Brexit talks hung in the balance. It rose 0.1pc, or 3.43 points, to 6558.82, while the more UKexposed FTSE 250 fell 0.3pc, or 59.24 points, to 19,870.49.
Some of the worst-hit pandemic stocks suffered another sell-off – underlining the sombre mood on the market when concerns about Brexit overshadowed the roll-out of Pfizer’s vaccine in the UK.
British Airways-owner IAG tumbled 3.6pc, or 6.05p, to 161.2p, Holiday Inn- owner Intercontinental Hotels slid 3.6pc, or 177p, to 4776p, plane engine servicer Rolls-Royce fell 3.5pc, or 4.6p, to 126.25p, and Easyjet closed 4.7pc lower, down 42.2p, at 855p.
Gold miner Centamin was boosted by bullish analysts at Swiss bank UBS. It rose 2.9pc, or 3.65p, to 126.65p after brokers slapped it with a ‘buy’ rating and gave it a 150p target price as they initiated regular coverage. Management changes and a review of its Sukari gold mine in Egypt have been promising, it said.
Elsewhere, emergency fundraisings and a recent flurry of deals drove record revenues and a threefold rise in profits at AIMlisted Numis.
Sales per head at the City broker, which counts more than 200 London-listed firms as clients, rose by 35pc to £549,000 as profits rose 98pc to £37m. As bosses Alex Ham and Ross Mitchinson put it, the year to September was certainly not one the company ‘could have planned for or envisaged’.
Figures released by the Office for National Statistics confirmed there was a surge in most types of mergers and acquisitions.
In particular the amount spent by UK firms buying other British companies soared from £400m in the second quarter to £4.4bn in the third. But Numis dropped 0.7pc, or 2.5p, to 341.5p.
Restructuring specialist Begbies Traynor also failed to win over traders, falling 3.6pc, or 3.4p, to 90p despite first-half turnover rising by 11pc.
Housing and care services provider Mears Group slid 1.6pc, or 2.5p, to 152.5p, after recent trading proved a mixed bag. Staff have been able to provide more maintenance and home repairs since the most stringent Covid restrictions lifted. This will allow it to eke out a full-year profit, but turnover will be lower than thought.