Profit warning takes shine off Ashtead

Ashtead, the equipment hire business, yesterday announced a fund-raising to help repair its stretched balance sheet. The positive news, however, was outweighed by a profits warning.

Ashtead, the equipment hire business, yesterday announced a fund-raising to help repair its stretched balance sheet. The positive news, however, was outweighed by a profits warning.

The company saidits banks had decided to extend the maturity of its debt, beyond the current January 2005, after Ashtead agreed to raise £130m through a bond issue. The proceeds from the bonds will be used to draw down £110m of bank debt, leaving these facilities at £310m, expiring in September 2007.

While the announcement was welcomed by analysts, they said more attention was focused on a trading update that accompanied the debt news. Ashtead said its pre-tax loss for the nine months to the end of January widened to £20.8m, from £16.4m the previous year. Profit before tax, goodwill and exceptionals plunged 49 per cent to £4.5m.

The company, which hires out equipment such as pumps and diggers and derives two thirds of its sales from its Sunbelt business in the US, warned: "The weakness of the US dollar will continue to impact Sunbelt's profits when reported in sterling."

Evolution Beeson Gregory, the broker, cut its full-year profit forecast to £2m from £4.9m, and also pared back profit estimates for the next financial year to £8m from £10m.