Ashtead lifts full-year target after strong demand - UPDATE

4th Mar 2014 07:06

- Full-year results expected to top previous expectations- Strong demand from UK and US- Third quarter profit leaps 54 per centFTSE 100 equipment rental business Ashtead reported a bumper set of third quarter earnings, driven by a strong performance from its two main divisions, and now expects full-year results to come in ahead of previous expectations.Underlying pre-tax profit surged 54% to £80.4m for the third quarter ended January 31st 2014 from £53.5m a year earlier. Revenue for the quarter jumped 22% to £400.1m, while earnings per share increased 51% to 10.1p. Ashtead, which makes 85% of its revenue from its US division Sunbelt, reported total nine-month 'operating' pre-tax profit of £293m, up 51% at constant exchange rates.Profits before taxes grew by 74% to £286m.During the same period Sunbelt rental revenue grew 22% to $1.484bn, driven by a 17% increase in fleet on rent and 5% improvement in yield. A-Plant delivered rental revenue of £181m, up 33% on the prior year."Our markets remain strong and we anticipate growing the Group's fleet organically in the coming year in the low to mid teens percent range. We remain committed to our debt leverage target of below 2 times EBITDA," Ashtead said in a company statement."As a result, we now anticipate a full-year profit ahead of our previous expectations and the board looks forward to the medium term with continued confidence." In an immediate reaction analysts at Jefferies informed clients of their decision to raise their price target on the shares to 1,050p (from 1,000p), "despite FX headwinds", with their forecasts for earnings per share in both fiscal year 2014 and 2015 rising by 5%. Amongst the reasons for the above, they cited the increasingly supportive US macroeconomic picture, the company´s strong platform for growth & continued market share gain and the on-going structural shift towards rental.CJ