Ashtead Group, today's FTSE250 flyer

FTSE250 Ashtead Group is one of those companies that is worth following if only because its business is essentially a reflection of what is happening in the wider economy, both in the UK and elsewhere.

It describes itself thus;

Ashtead Group is a leading provider of rental equipment with operations in the US and the UK. We provide equipment that lifts, powers, generates, moves, digs, supports, scrubs, pumps, directs, ventilates, whatever the job needs. We rent equipment so that our customers can focus on what they do best rather than maintaining and servicing equipment they may use only once a year.

http://www.ashtead-group.com/

I suppose that it is possible that it might actually do better during bad times rather than when the economy is booming as companies decide to put off purchasing equipment and instead decide to hire it.  On the other hand, being one of the biggest plant hire firms in the UK and the US, it is in a prime position to be a go to company at any time, in both good and bad economic times.



Results today were pretty impressive, especially in the US.

Group revenue improved 21% in the quarter reflecting predominantly strong growth in fleet on rent and yield in the US.  Sunbelt's rental revenue grew 17% to $384m (2011: $328m), including a 13% increase in fleet on rent and a 4% improvement in yield.  In the UK, A-Plant's first quarter rental revenue grew by 6% to £45m (2011: £42m) including 7% growth in average fleet on rent offset by a small yield decline.

The upturn in Ashtead's US operations may be a reflection of an improving economy there.  On the other hand when it comes to the UK a more cautionary word was used today to describe what is happeing.

"The markets in which we operate have performed as anticipated with gently improving conditions in the US and a more challenging outlook in the UK. We do not anticipate any significant changes to this environment in the short term," revealed Ashtead's Chief Executive, Geoff Drabble.

"Against this back-drop our continued market share gains are again reflected in our strong growth in fleet on rent and improving margins demonstrate our operational efficiency. Given the momentum established in the business, we now anticipate a full year result materially ahead of our previous expectations," Drabble said.  

Ashtead is making a habit of raising profits guidance, having done so as recently as June 21st.

The group's acquisition of Sunbelt in the USA is paying off in spades, with first quarter revenue surging to $432.1m (£275.3m) from $361.1m (£222.5m) the year before.

 digitallook.com

The use of a word like"challenging" is always a red flag that everything is not as rosy as it could be.  However, given that we have had 4-5 years now of challenging economic conditions and many companies are still doing ok and in many cases improving their performance, perhaps such keywords are no longer as important as they once were when reading a trading statement or final report?  After all, challenging conditions were often accompanied by poor results, but now we see the word often used even when it's the opposite.  In the case of Ashtead, they seem to be doing alright, so increasingly as investors and traders we need to be reading between the lines.

Sources;

http://www.ashtead-group.com/
digitallook.com
investegate.co.uk/