Ashtead sees positive cash flow and strong pre-tax profit

Despite strong numbers, the group will still slash spending and suspend share buyback scheme

Article updated: 27 April 2020 9:00am Author: Ian Forrest

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  • Pre-tax profit for the year to April is expected to be £1.05bn
  • It is planning a range of measures in the new financial year to preserve cash, including a reduction in capital expenditure and suspending the share buyback scheme
  • The news was greeted well by the market with a 5% rise in the shares in early trading
  • Recommendation: In times of such considerable economic uncertainty conditions can change rapidly but Ashtead has shown its resilience so we continue with our 'Buy' recommendation for medium risk investors seeking growth

Equipment rental group Ashtead issued a reassuring trading update to the market which drew a positive response from investors. The company said that since mid-March, lockdown measures imposed by governments had had an impact on its markets, but most of its rental locations remained opened and over the past couple of weeks rental levels have actually improved. Ashtead has been designated as an essential business as it supplies equipment to important sectors such as first responders, hospitals and utilities. Pre-tax profit for the year to April is expected to be £1.05bn and the company is planning a range of measures in the new financial year to preserve cash, including a reduction in capital expenditure and suspending the share buyback scheme.

The news was greeted well by the market with a 5% rise in the shares in early trading. The improvement in rental conditions in recent times is encouraging for investors, as is the news that an internal stress-testing exercise involving much lower activity levels over the coming year showed that the company still remained cash flow positive. Of course, in times of such considerable economic uncertainty conditions can change rapidly, but Ashtead has shown its resilience so we continue with our 'Buy' recommendation for medium risk investors seeking growth.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.

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