Property

Ashtead Group reports earnings boost from devalued sterling as Barratt Developments reassures on housing market

London listed equipment hire specialist Ashtead Group announced a strong set of first quarter results on Wednesday, with revenues up by 4% to £707 million and profit before tax also 4% higher at £177.9 million, after receiving a Brexit boost to its bottom line.

As a US dollar earner, Ashtead has been a net beneficiary of the UK’s vote for Brexit and the subsequent devaluation of sterling, which accounted for much of the growth in statutory earnings after adding £17 million to the bottom line in the first quarter.

Management see minimal risk from the outcome of the referendum, given that UK operations only account for around 10% of revenues at the group, although the board says it will monitor macroeconomic developments closely.

The core hire business experienced stronger growth during the period than the statutory results suggest. Hire revenue increased by 12% to £660.8 million and Ebitda was up by 9% to £340 million. This is while leverage also fell during the period, with net debt to Ebitda down from 1.8 times in 2015 to 1.7 times in 2016.

Ashtead shares were up by more than 5% in the first half hour of trading, to 1,327.0 pence.

Barratt Developments sees little risk to housing market from Brexit, reports strong full year growth

Shares of FTSE 100 house builder, Barratt Developments, were volatile in early trading as the market sought to digest final results for the 2016 year.

While stopping short of saying that there had been no impact on the business from the June vote for Brexit, management said that the outlook for the housing market is favourable and that a strong net cash position, of close to £5 billion, means that Barratt is well placed to navigate any near-term turbulence.

The group reported a 12% increase in revenues for the year, to £4.2 billion, and a 16% increase in operating profits to £668 million. This was on a 5.3% increase in housing completions to just more than 17,300.

Basic earnings per share were 21% higher at 55.1 pence enabling management to raise the final dividend by a similar 19%, to 12.3 pence, while still maintaining healthy levels of dividend cover at just less than 2 times.

The board also declared a special dividend of 12.4 pence for the year, bringing total cash returns to shareholders for the period to 30.7 pence, which equates to a yield of more than 6% at current price levels.

Barratt shares were down by 0.5% at 504.0 pence in the first half hour of trading.

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