UK Edition
Ashtead set to benefit from US hurricane clear-up
A spate of hurricanes in the United States has stoked demand for the services of Ashtead, with it sending more equipment and workers to aid the clear-up effort.
Chief executive Geoff Drabble said the firm had already seen a "significant" rise in demand for its diggers and tools, and was taking steps to ensure there was enough equipment and workers in the affected locations.
The recovery operation would involve “a major clean-up effort and then a multi-year rebuild programme,” he said. At a minimum, the work would help the firm reach its 2021 targets.
Shares in the firm leaped as much as 8.6pc on Tuesday morning to £18.28, a record high, on the back of the news.
“Currently, our efforts are focussed on supporting our colleagues, neighbours and customers and we stand ready to provide further assistance,” he added.
The most estimates put the cost of the damage of Hurricane Irma has been put at between $20bn and $40bn, according to AIR Worldwide.
Ashtead has itself been hit by the effects of the flooding. Mr Drabble estimated that it will have lost around £30m of equipment in Texas alone following floods associated with hurricane Harvey. While this is insured, replacing it would delay some work, he explained.
Ashtead reported results for its first quarter of trading on Tuesday, which showed both its US and UK businesses have performed well.
Overall revenues for the three months to July 31 were up 16pc to £880.1m, while pre-tax profits rose 19pc to £228.9m.
The firm has continued to grow through spending on its fleet and through acquisitions of other smaller companies, enabling it to grow more quickly. It was also helped by weakness in the pound, which boosted the value of profits earned overseas.
George Salmon, equity analyst at Hargreaves Lansdown, said conditions have been favourable for Ashtead, particularly in the US, but urged caution. “Sunbelt, the group’s sizeable US business, looks like it could well be one of the first ports of call in the clean-up operation in both Houston and Florida,” he said.
“However, investors should remember that it remains a cyclical business and its £2.6bn debt pile will still need to be serviced when the cycle turns. Historically, the group hasn’t been great at navigating smoothly through the peaks and troughs.”