Investors hope for answers after Ashtead profit warning

Investors in British equipment rental firm Ashtead will be combing through the firm’s half-year results on Tuesday for greater clarity after a November profit warning sent shares tumbling.

The company announced last month that it expects to take a more than £1.6bn depreciation charge for the year, prompting shares to fall nearly 10 per cent.

Analysts had forecast earnings of $5.2bn (£4.1bn) for 2024, but are now forecasting $5bn.

In the update, Ashtead also lowered its annual group and US rental revenue growth forecast to between 11 and 13 per cent, down from 13 and 16 per cent, and noted net interst costs were likely to amount to around $540m (£425.23m) for the year.

The FTSE 100 firm, which rents out equipment ranging from diggers to construction tools in markets across North America and the UK, cited a range of reasons for the gloomy outlook.

Lower levels of emergency response, caused by a far quieter hurricane season and fewer naturally occuring events such as wildfires has tempered demand for its products. At the same time, the impact of longer than anticipated Hollywood actors’ and writer’s strike has battered the firms’ Canada-based film and television business.

“Ashtead’s November profit warning means the headlines for the first half and even guidance and forecasts for the full year to April are already being reset, but this set of results should be no less informative for that,” AJ Bell analysts Russ Mould and Danni Hewson said in a recent note.

“Shareholders and analysts will be looking for more details on the reasons for the downgrade to full-year expectations and the extent to which the second-quarter slowdown could linger into the third period, or beyond,” they added.