LONDON (ShareCast) - (Sharecast News) - Construction equipment hire company Ashtead lifted full year guidance driven by a strong second quarter as it declared an unchanged dividend.
The company said first-half profits fell less than expected as interim profits came in 22% lower to £506m. Revenue was 4% lower at £2.4bn. The interim dividend was held at 7.15p a share on free cash flow of £822m.

Ashtead reported a strong second quarter of market outperformance across the business, which contributed to rental revenue down only 4% in the half year at constant exchange rates.

"While trading volumes were lower than last year as a result of the pandemic, this has been mitigated, in part, by emergency response efforts throughout our business but particularly within our specialty businesses," the company said on Tuesday.

It added that its Sunbelt Rentals unit had been designated as an essential business in the US, UK and Canada, supporting government and private sector responses to the pandemic.

"Based on our half year performance and assuming no further significant adverse impact on our business resulting from the COVID-19 pandemic, we now expect full year results ahead of our previous expectations," the company said.

Ashtead said it now expected group rental revenue to fall 3% - 7% compared with previous guidance of 5% - 9%. Capital expenditure was lifted to £650m - £700m from £485m - £540m and free cash flow lifted to £1.2bn from £1bn.

Hargreaves Lansdown analyst William Ryder noted that Ashtead's capital expenditure during the period "has dropped like a stone".

"We understand the short term rational behind conserving cash, but longer term growth risks being hampered by a lack of investment. Expectations for the full year have been revised upwards, and it's important the group keeps investing in itself going forward," he said.

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