Monday, May 11, 2009

Ashtead latest profit on line for £91m but prospects getting worse

Ashtead generated £230m of cash in the financial year just ended – the hire group’s 12-month period ran through to the end of April.

The ВЈ230m total splits between ВЈ140m from operations and ВЈ90m from the sale of Ashtead Technology.

Net debt at 30 April was ВЈ1.0m; more than ВЈ100m lower than the ВЈ1.1bn of net debt three months earlier at 31 January 2009.

In a trading update this morning, Ashtead said that the group expects to generate at least a further ВЈ100m of net cash flow in 2009/10 after making the appropriate investment in its rental fleets.

Ashtead won’t give full details of pre-tax profit until 18 June but City analysts’ forecasts range from £86m to £95m with a consensus average of £91m.


Ashtead latest profit on line for £91m but prospects getting worse


Ashtead had warned earlier that performance in the second-half was down.

In the previous year the figure was ВЈ112m.

However, should anyone think the group has emerged from the financial storm, Ashtead is flagging up a warning that things are currently getting worse and even the board’s profit estimates for the current year (2009/10) are in need of trimming back further.

The trading update pointed out: “Rental rate deterioration has been greater than anticipated in recent months due to the weak economy and a harsh winter, leading to a year-on-year decline in group fourth quarter rental revenues at constant exchange rates of 24%.

“The cost reduction measures originally announced with our half year results last December are now substantially complete. These comprised the closure of underperforming rental stores, the disposal of rental equipment made surplus by the decline in rental demand and headcount reductions.

“The final cost reductions significantly exceed our original target and mean that, across the group, our current annualised local currency cost base is now around (£100m) lower than it was last summer.

“The one-time exceptional charge incurred in delivering these savings, much of which is non-cash, is around £75m. Including the proceeds realised from the sale of the surplus equipment, the programme has generated a net cash inflow of around £40m.

“Extrapolation of recent rental rate and revenue trends suggests that profits in fiscal 2009/10 are likely to fall below the board's earlier expectation.”