Ashtead Group’s Share Price Dropped 15.2% on Its Trading Update

The Ashtead Group plc (LON: AHT) share price dropped 15.19% after releasing a trading update for the first half and second quarter of its financial year ended on 31 October 2023. The company expects record-breaking results for the half-year and the second quarter.

Notable highlights include that group rental revenue growth for the half-year is expected to be an impressive 13%. EBITDA growth is estimated at 15%, amounting to approximately $2,580 million (compared to $2,246 million in 2022). 

Adjusted profit before taxation is projected to grow by 5% to approximately $1,310 million (compared to $1,243 million in 2022). This growth has been primarily fueled by the successful execution of its strategic growth plan, Sunbelt 3.0.

Despite a strong performance in end markets and the presence of ongoing structural drivers, the Group encountered some challenges in the late second quarter. These challenges include reduced emergency response activity due to a quieter hurricane season compared to recent years and fewer naturally occurring events, such as wildfires. 

Prolonged writers’ and actors’ strikes in Canada significantly affected the Film & TV business. They caused some ripple effects on other businesses renting into that space in Canada, the US, and the UK. This situation has also extended into the third quarter.

Despite the challenges impacting the current financial year, the Group remains optimistic about the future. The Group anticipates delivering record full-year results. 

Revised guidance for Group and US rental revenue growth, now expected at 11 to 13% (previously guided at 13 to 16%), will lead to EBITDA being 2 to 3% below present market expectations.

The expectation of a full-year depreciation charge of approximately $2,120 million and a net interest cost of approximately $540 million, resulting in adjusted profit before tax falling below current market expectations. Capital expenditure guidance remains unchanged at $3.9 to $4.3 billion.

Despite these one-off events affecting the current financial year, the Group's North American end markets continue to show strength, with support from increasing mega projects and recent legislative acts in the US. The Group sees substantial structural growth opportunities, providing confidence for the future.

The company will provide further detailed information on the first-half and second-quarter performance and the full-year outlook during the half-year results release on December 5, 2023.

Ashtead share price. 

The Ashtead share price dropped 15.19% to trade at 4436.5p from Friday’s closing price of 5231.0p.