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Ashtead cuts spending plans

Industrial rental company Ashtead said it plans to cut its capital expenditure for the coming year by about £500m from an initial range of £1.1bn–£1.3bn as part of efforts to save money in the face of Covid-19.

The FTSE 100 group said that – “with few exceptions” – its sites across the US, UK and Canada remain open and active. It added:

Although trading volumes have been impacted negatively by the measures taken to contain the virus, this has been mitigated, in part, by emergency response efforts throughout our business units but particularly our specialty businesses.

Ashtead said it expects underlying profit before tax of around £1,050m for the year ending April 30th. That would be a slightly fall from last year’s £1,110m.

The company has undertaken a range of measures to reduce costs – as well as the capex cuts, it has suspended M&A activity, paused its share buyback programme, put a freeze on new hires and reduced discretionary spending. It has not made an redundant, and said it does not intend to access the UK’s Coronavirus Job Retention Scheme.

It said it has accessed an additional $500m through its senior secured credit facility for the coming year, adding it expects to remain cash-flow positive throughout the next financial year.

Brendan Horgan, its chief executive, added:

Looking forward, I am certain the swift actions we took during these unprecedented times and the strength of our balance sheet will serve the group well.  These factors, when combined with the diversity of our products and end markets, contribute to the strength of our long-term business model and put the Board in a position of confidence to look to the coming financial year as one of strong cash generation and strengthening our market position.

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