ASHTEAD GROUP PLC
TRADING UPDATE
To assist investors in the current uncertain economic environment, the Board of
Ashtead is providing the following trading update.
Construction markets in the UK and US are, as anticipated, weaker with private
sector projects particularly impacted by the shortage of funding. Rental
volumes have, however, held up relatively well and are broadly in line with our
expectations. Our businesses are well positioned to continue to benefit from
the major government-financed infrastructure programmes and we are also gaining
market share in our core markets. Rental rate deterioration has, however, 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.
Whilst the Board anticipates underlying pre-tax profits for the year ended 30
April 2009 within the current range of analysts' forecasts (albeit towards the
lower end), 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.
The Board remains highly confident in the Group's long term strength. The Group
generated around £230m of cash in the year ended 30 April 2009 with around £
140m from operations and £90m from the sale of Ashtead Technology. Net debt at
30 April 2009 was approximately £1,040m; more than £100m lower than the £1,147m
of net debt at 31 January 2009. In addition the Board expects the Group to
generate at least a further £100m of net cash flow in 2009/10 after making the
appropriate investment in its rental fleets.
With long term committed finances and effectively no earnings based covenants
to adhere to Ashtead has the financial flexibility and balance sheet strength
to cope with current conditions. This flexibility and strength, coupled with
its strong positions in both the US and UK rental markets, mean that the Group
is well placed for the future.
Ashtead will report results for the year ended 30 April 2009 on Thursday 18
June 2009.
Contacts
--------
Geoff Drabble Chief executive
Ian Robson Finance director 020 7726 9700
Brian Hudspith Maitland 020 7379 5151
Note: Analysts' forecasts for the profit before taxation, amortisation of
acquired intangibles and exceptional items derived from continuing operations
for the year ended 30 April 2009 ("underlying pre-tax profit") range from £
85.5m to £95.4m with a consensus average of £91.3m and compare with £112.3m in
2007/8.
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