Ashtead Stock: Mixed Results Prompt Dividend Boost

Ashtead Group has revealed contrasting financial performance in its fourth quarter results ending April 30, showing some concerning trends for investors. The British industrial equipment rental company reported a noticeable decline in key metrics, with pre-tax profit falling to $392.2 million from $417 million in the previous year. Total revenue decreased by 4% to $2.53 billion, while adjusted pre-tax profit dropped 3% to $430 million. Particularly troubling was the collapse in used equipment sales, which more than halved from $222.9 million to $111.7 million. Despite these challenges, rental revenue—the company's core business—showed resilience with a slight increase to $2.33 billion from $2.31 billion. North American operations presented a mixed picture, with the General Tool segment seeing 5% revenue decline while the Specialty segment achieved an impressive 7% growth.

Shareholder Returns Strengthened Despite Headwinds

In a move to reassure investors, Ashtead has increased its final dividend to 72 US cents per share, bringing the total annual dividend to 108 US cents—up 3% from last year's 105 US cents. Shareholders of record on August 8 will receive payments on September 10. The company has also demonstrated financial prudence by significantly reducing capital expenditure from $4.31 billion to $2.40 billion and generating a substantially improved free cash flow of $1.79 billion, up from just $216 million. Looking ahead, Ashtead projects revenue growth between 0-4% for fiscal 2025-26, while confirming plans to relocate its primary stock listing to the United States in the first half of fiscal 2026, subject to shareholder approval.

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Source StockWorld