Ashtead Group shares plummeted after it lowered its guidance – revealing revenues were dented by fewer natural disasters and the Hollywood’s writers’ strike.
The London-listed building equipment rental company, which does the bulk of its business in the US, said revenue was hit by ‘lower levels of emergency response activity with a significantly quieter hurricane season.’
Ashtead told investors it now expected Group and US rental revenue growth of between 11 to 13 per cent in the year to October 31.
Ashtead shares fell 12.4 per cent to 4,592p today, as investors ditched stock on the news.
The London-listed company revealed that it expects group rental revenue growth for the half year to be 13 per cent year-to-year to October 31
Ashtead had previously expected growth for both to be between 13 to 16 per cent.
This now means earnings before interest, taxes, depreciation, and amortisation (EBITDA) is set to be 2 to 3 per cent below current market expectations.
Ashtead said the writers’ and actors’ strike has impacted its ‘film & TV business in Canada significantly’.
The group revealed the strike ‘persisted for longer than anticipated’ and this had some impact ‘on the rest of the Canadian, US, and UK businesses that rent into that space’.
It also said that it expected a full-year depreciation charge of around $2.1billion and a net interest cost around $540million, meaning that adjusted profit before tax will be below current market expectations.
Despite this, Ashtead said: ‘These one-off events impacting the current financial year, our end markets in North America remain robust, supported in the US by an increasing number of mega projects and recent legislative acts
‘This, combined with the substantial structural growth opportunities that we see for the business, enables the board to look to the future with confidence.’
In May, Ashtead began a new share buyback programme less than a week after it had concluded its previous scheme.
At the time, the firm said it would snap up another $500million of its shares between now and April 2024.
It told shareholders that purchases would begin at a ‘relatively low level,’ with the amount bought at specific times dependent on factors like business investment, net debt and the economic backdrop.
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