Shares of Ashtead Group (LSE: AHT) increased by 2.3% in early trade after the company, which rents construction and industrial equipment, delivered record pretax profit of £120m in the first quarter.
Ashtead’s businesses continued to perform well in August and the company now expects that its full year results will beat expectations.
“We invested £284m in capital expenditure and a further £32m on bolt-on acquisitions in the quarter as we continue our strategy focused on organic growth,” chief executive Geoff Drabble said.
Due to strong demand in the UK and the US the group has increased its capital expenditure guidance to between £825m and £875m this year.
Ashtead’s net debt increased slightly to £1.3bn at 31 July 2014, but due to earnings growth the ratio of net debt to EBITDA reduced to 1.9 times. Ashtead said that a healthy balance sheet will underpin future growth. Sales increased to £458m in the quarter from £411m a year earlier.
City experts believe Ashtead could increase the full-year dividend by 50% to 31p per share. Therefore, after this morning’s price movement, Ashtead shares may offer an income of 1.3%.
