MARKET REPORT: Ashtead equipped for a strong Covid recovery

Ashtead smashed City forecasts after it picked up extra work supporting first responders, hospitals and testing centres during the pandemic.

The equipment rental firm, which also benefited hugely from being designated ‘essential’ in the US, UK and Canada, said profits fell around a fifth to £506million in the six months to October.

But this included a much bigger than expected recovery during the second quarter and has allowed it to bump up its annual guidance. The revenue from renting out construction equipment and tools such as diggers will still fall. 

Recovery: Equipment rental firm Ashtead picked up extra work supporting first responders, hospitals and testing centres during the pandemic

But Ashtead thinks it will be between 3 per cent to 7 per cent lower, rather than 5 per cent to 9 per cent lower.

It is faring better than many because its services are so diverse. It is the UK’s biggest supplier of traffic cones – and organises the perimeter fence and crowd control at Glastonbury festival.

Though trading is trickier in the US, where it generates about 86 per cent of its turnover, it has still been able to commit to its 7.15p half-year dividend in a boost for savers and pensioners who have been deprived of key payouts this year.

Analysts praised the FTSE 100-listed firm, with Numis’s Steve Woolf deeming it ‘a very strong set of results’ and RBC saying it was still a ‘big fan’.

Stock Watch – Eqtec 

Technology group Eqtec has inked a deal to buy a waste-to-energy plant in north Wales.

Eqtec will initially pay £2.3million for the project, which will burn enough household rubbish to provide energy for 37,500 homes. 

However, the power could be used by local industry instead.

Eqtec will pay another £2million after 12 months and could hand over another £6.7million if various targets are met. 

Shares, up 800 per cent this year, rose 7.4 per cent, or 0.07p, to 1.02p. 

Shares closed 2.2 per cent higher, up 71p, to 3300p, and are up by more than a third this year.

Ashtead outperformed the Footsie, which was treading water as Brexit talks hung in the balance. It rose 0.1 per cent, or 3.43 points, to 6558.82, while the more UK-exposed FTSE 250 fell 0.3 per cent, or 59.24 points, to 19,870.49.

Some of the worst-hit pandemic stocks suffered another sell-off – underlining the sombre mood on the market when concerns about Brexit overshadowed the roll-out of Pfizer’s vaccine in the UK.

British Airways-owner IAG tumbled 3.6 per cent, or 6.05p, to 161.2p, Holiday Inn-owner Intercontinental Hotels slid 3.6 per cent, or 177p, to 4776p, plane engine servicer Rolls-Royce fell 3.5 per cent, or 4.6p, to 126.25p, and Easyjet closed 4.7 per cent lower, down 42.2p, at 855p.

Gold miner Centamin was boosted by bullish analysts at Swiss bank UBS. It rose 2.9 per cent, or 3.65p, to 126.65p after brokers slapped it with a ‘buy’ rating and gave it a 150p target price as they initiated regular coverage. 

Management changes and a review of its Sukari gold mine in Egypt have been promising, it said.

Elsewhere, emergency fundraisings and a recent flurry of deals drove record revenues and a threefold rise in profits at AIM-listed Numis.

Sales per head at the City broker, which counts more than 200 London-listed firms as clients, rose by 35 per cent to £549,000 as profits rose 98 per cent to £37million. 

As bosses Alex Ham and Ross Mitchinson put it, the year to September was certainly not one the company ‘could have planned for or envisaged’.

Figures released by the Office for National Statistics confirmed there was a surge in most types of mergers and acquisitions.

In particular the amount spent by UK firms buying other British companies soared from £400million in the second quarter to £4.4billion in the third. But Numis dropped 0.7 per cent, or 2.5p, to 341.5p.

Restructuring specialist Begbies Traynor also failed to win over traders, falling 3.6 per cent, or 3.4p, to 90p despite first-half turnover rising by 11 per cent.

Housing and care services provider Mears Group slid 1.6 per cent, or 2.5p, to 152.5p, after recent trading proved a mixed bag. 

Staff have been able to provide more maintenance and home repairs since the most stringent Covid restrictions lifted. This will allow it to eke out a full-year profit, but turnover will be lower than thought.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.