Ashtead rocked by Hollywood actors’ strikes
By Jessica Clark
dmg media (UK)
City & Finance
HOllYWOOD strikes and fewer natural disasters dented profits at ashtead, the company revealed. the equipment rental firm’s stock plunged as much as 15pc yesterday after it said profit for the full year will be below market expectations. ashtead, which trades under the name Sunbelt rentals, provides construction and industrial equipment across the UK, US and Canada. the london-based business makes 86pc of its revenue in the US, where it is the second largest equipment rental firm with 20,000 employees and 1,130 stores. a quiet US hurricane season and a lack of other natural disasters such as wildfires between august and October reduced demand for ashtead’s emergency response equipment. the Hollywood writers’ and actors’ strikes also meant there was a smaller market for its services on tV and film sets. the industrial action came to an end this autumn after unions reached a deal with studio bosses. ashtead said the strikes ‘persisted for longer than anticipated’ and will continue to affect its Canadian tV and film business in the third quarter. earnings in the full year to the end of april will be 2pc to 3pc below market expectations, ashtead said. the firm’s share price dropped as much as 15pc to 4437p following the update, before partially recovering to close 10.5pc down at 4694p. ‘investors have reacted badly to the update with traders selling the stock heavily,’ said Victoria Scholar, head of investment at interactive investor. russ Mould, investment director at aJ Bell, added: ‘it’s rare to see construction rental group ashtead issue a profit warning so when one does come along, it’s natural for the share price to take a beating. ‘in many ways, the equipment hire specialist is a victim of its own success. Shareholders have enjoyed a string of upgrades to earnings estimates in the past couple of years, so even this very mild disappointment has come as a considerable shock.’ ashtead said its full-year group and US rental revenue growth will be between 11pc and 13pc, compared to previous forecasts of between 13pc and 16pc. it also revealed a full-year depreciation charge of more than £1.7bn and a net interest cost of more than £433m due to rising interest rates. its capital expenditure guidance was unchanged at £3.13bn to £3.45bn. ‘Despite 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,’ a spokesman said. ashtead will publish its second quarter results on December 5.