Equipment rental group Ashtead increased its dividend and announced a £200m share buyback on Tuesday after bucking trends among its publicly listed peers and reporting a 24 per cent rise in full-year profits. The FTSE 100 company, which does 80 per cent of its business in the US, reported a pre-tax profit of £617m for the year to April 30. Improved margins and a particularly strong fourth quarter helped revenue and profits come in ahead of analyst expectations. Full-year revenue increased 19 per cent to £2.5bn. Geoff Drabble, chief executive, said: “Obviously its been another good year, and we’ve seen a good steady improvement in the first six weeks of the new year, so we’re feeling very confident.” Mr Drabble believes the construction industry, which provides around 45 per cent of Ashtead’s business, will continue to see moderate growth outside of the residential sector. “Those of us who lived through 2009 and 2010 are very cautious, we don’t want to create a bubble again. I think the growth we have seen has been very responsible and we anticipate it continuing for a number of years ahead.” The company is to pay a final dividend of 18.5p, making 22.5p for the full year, a 48 per cent rise on 2015. Ashtead’s positivity contrasts with recent disappointing results and downbeat guidance from its biggest rivals. In April, United Rentals, the largest rental group in the US, reported a 20 per cent fall in first-quarter profits, and cut full-year forecasts. However, Mr Drabble said its issues were company-specific, and did not reflect the strength of the wider industry, which is dominated by thousands of small businesses. “I’d love to say it’s the genius of the management team, but in fact it comes down to sector focus — United Rentals are heavily exposed to oil and gas and heavily exposed to Canada, they’re each about 1 per cent of our business.” In the UK, HSS Hire’s first year on the London Stock Exchange featured a string of profit warnings and a management overhaul, and shares in Speedy Hire have fallen almost 50 per cent in the last year. “Poor profit performance is an internal issue not a market issue,” Mr Drabble added. “HSS actually grew their top-line by 10 per cent. The numbers are not reflective of a terrible market, but a somewhat ambitious IPO document.” Copyright The Financial Times Limited 2016. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web. Source link

UK construction companies indicated a sustained reduction in business activity during August, but the pace of decline was only marginal and much softer than the seven-year record seen during July, according to IHS Markit data. New order volumes also moved closer to stabilisation, with the latest reduction the least marked since May. This contributed to a renewed rise in staffing levels across the construction sector and a rebound in business expectations for the next 12 months. However, latest data indicated a further steep acceleration in input cost inflation. Purchasing prices rose at the fastest pace for just over five years amid reports that exchange rate depreciation had acted as a catalyst for increased charges among suppliers of construction materials. Sub-sector data pointed to much slower reductions in housing activity and commercial building than those recorded in July. In both cases, the rate of contraction in August was the slowest for three months. However reports from survey respondents suggested that Brexit uncertainty continued to act as a brake on the construction sector during August, especially in terms of house building and commercial work. Despite this, a number of firms noted that sales volumes had been more resilient than expected. Some panel members also commented on signs of a rebound in client confidence from the lows seen earlier this summer. Reflecting this, latest data highlighted that incoming new work decreased at the slowest pace since May. Signs of a more stable trend for new business volumes resulted in a marginal expansion of staffing levels across the construction sector in August. However, sub-contractor usage continued to decrease, and rates charged by sub-contractors rose at the second-slowest pace since June 2013. Looking ahead, construction firms pointed to a rebound in business confidence from July’s 39- month low. Although the degree of positive sentiment was the highest since May, it remained close to the weakest recorded over the past three years. Tim Moore, Senior Economist at Markit and author of the Markit/CIPS Construction PMI, said: “The downturn in UK construction activity has eased considerably since July, primarily helped by a much slower decline in commercial building. Construction firms cited a nascent recovery in client confidence since the EU referendum result and a relatively steady flow of invitations to tender in August. “However, the latest survey indicates only a partial move towards stabilisation, rather than a return to business as usual across the construction sector. There were still widespread reports that Brexit uncertainty had dampened demand and slowed progress on planned developments, especially in relation to large projects. As a result, total new order volumes continued to fall during August, which stands in contrast to the three-year run of sustained growth seen prior to May 2016. “Despite another month of reduced output, the latest figures can be viewed as welcome news overall after a challenging summer for the construction sector. The move towards stabilisation chimes with the more upbeat UK manufacturing PMI data for August, and provides hope that the near-term fallout from Brexit uncertainty will prove less severe than feared.” Source link

Nigerian militants in the oil-producing Niger Delta have claimed an attack on a Shell-operated export pipeline, after halting hostilities last month in order to pursue talks with the government. The military launched a new offensive in August against militants in the swampy region, which is laced with oil and gas infrastructure that is difficult to protect from attacks. But the shadowy group calling itself the Niger Delta Avengers has said recently that it is open to dialogue with the Muhammadu Buhari-led government. Formal talks have not yet been held, to the frustration of residents of the impoverished Delta, and may be derailed by Saturday’s attack. Community leaders in the region say it remains unclear whether President Buhari is committed to discussions to resolve the crisis, because he has not made statements to that effect or visited the Delta since taking office. Attacks this year on oil installations in the southerly region claimed by the Avengers have cut Nigeria’s production to less than 1.4m barrels a day, nearly 40 per cent less than its recent peak. The new militancy has raised fears of a return to the prolonged unrest witnessed in the 2006-09 uprising in the Delta. The attack cut production at the Bonny 48-inch crude oil export line, the Avengers said in an online statement on Saturday, the authenticity of which was impossible to verify. Shell declined to comment and there was no immediate statement from the Nigerian government. It comes ahead of the anticipated restart of exports from the Shell-operated Forcados terminal. Loadings there in 2015 averaged 200,000 bpd, but the terminal has been offline since an attack in February, also claimed by the Avengers, on an underwater pipeline. The Saturday statement said the group would resist action by the government to undermine the ceasefire. When Mr Buhari met US President Barack Obama this week, he suggested that a military push in the Delta was needed, according to three western diplomatic and security sources in the Nigerian capital, Abuja, who were briefed on the meeting. That message may have reached the Delta militants, leading them to attack again, said one of the sources. The attack underlines how volatile Nigeria’s production remains as global markets watch it and Libya, the other Opec producer where output has been disrupted in recent months. The Opec producers’ cartel is meeting in Algiers this week for discussions on the oil market, which is suffering its worst downturn in a decade. Long Africa’s top oil producer, Nigeria has been pumping less than Angola for months. Additional reporting by Anjli Raval in London Sample the FT’s top stories for a week You select the topic, we deliver the news. Source link

Competition in the household water market risks being a “damp squib”, with many customers ending up disappointed after an “overly optimistic” review by Ofwat. The Consumer Council for Water (CCWater) said the savings that would be available to customers would not be enough to persuade many people to switch supplier. It warned that many vulnerable customers are unlikely to take part in the market and could lose out on possible savings as a result. The water watchdog has written to Ofwat, challenging some of the more positive assumptions it has made in its cost-benefit review of competition, in which it outlined four possible scenarios. CCWater has expressed concern that the regulator has not made clear which of its scenarios is the most plausible. The group insisted it is “crucial” Ofwat tells government what it believes would be the most likely outcome, before a decision is made. CCWater chief executive Tony Smith said: “If household competition is to be introduced we want to see a market in which customers are actively switching their supplier or renegotiating with their current supplier to get the best deal on price and service. We do not want to see the water sector experience the same problems that have affected the energy market. “We are not convinced by many of the more positive assumptions that Ofwat has made in its analysis. In particular, we question how many water customers would be interested in switching supplier for such a small amount of money. “We are also concerned that large numbers of customers, particularly the elderly and others living in vulnerable circumstances, may not participate actively in the market and that could cost them money.” In September, Ofwat submitted its analysis of the costs and benefits of introducing household competition to the government. This included four possible scenarios based on assumptions about what might happen, including the likely level of customer switching, retail savings and cost efficiencies. The regulator claimed that the financial benefits from opening the residential retail water market to competition could be worth almost £3 billion over 30 years. However, a scenario in which costs were higher, innovation is scarce and competitive activity is weak would result in a negative net present value of -£1.4 billion over 30 years. The government is now considering Ofwat’s report and will use it to make a decision on whether or not to open competition to household customers. Source link

©Bloomberg Britain’s second-biggest brickmaker is planning a £450m float on the London stock market as it seeks to capitalise on the housebuilding boom. Forterra, formerly the UK building products division of Hanson, controls 29 per cent of the British market and is seeking to increase its brickmaking facilities. More On this topic IN Construction The company is owned by Lone Star, the US private equity business, which acquired it last March from HeidelbergCement in a £990m deal. It follows last year’s flotation of Ibstock, the UK’s largest brickmaker, which was listed by Bain Capital, another private equity firm, just nine months after it bought the group. Forterra employs 1,600 staff and owns 17 factories and 12 clay quarries in the UK. It is the sole producer of Fletton bricks, which are used to build about a quarter of all British houses and sold under the London Brick brand. Stephen Harrison, Forterra chief executive, said: “The fundamentals of our industry are attractive and with our efficient manufacturing base, strong positions across all product categories, longstanding customer relationships, and significant scope for future capacity expansion, Forterra is very well placed for the future.” Lone Star is planning to sell roughly 25 per cent of its holding to institutional investors in the UK and abroad. This would give the company an enterprise value of about £600m including debt, or £450m with debt stripped out, based on rival Ibstock’s current market valuation. New residential homes and home improvements accounted for about 95 per cent of revenue last year. The rest came from the commercial construction market. Last year revenue at Forterra rose 8 per cent to £290m; while earnings before interest, taxes, depreciation and amortisation increased 29 per cent to £71m. Brickmakers in Britain have been ramping up capacity since 2013 after closing plants, slashing their workforces and leaving factories idle in the winter months when the housing market collapsed in the wake of the financial crisis in 2007. Forterra cut domestic production by a fifth to about 2bn bricks between 2008 and 2013 but has since reinstated previously mothballed plants amounting to about 50m bricks a year. It is planning to expand capacity at its Claughton, Accrington and Desford facilities. It also has permission to develop a manufacturing facility at Clockhouse in Surrey, but is unlikely to make a final decision until 2020. Even despite an increase in housebuilding, supported by government incentives, the number of housing starts are still 28 per cent below that in the first quarter of 2007. Construction activity overall is 4.1 per cent below its pre-recession peak but Forterra said that the growing UK population combined with a structural undersupply would “underpin future demand for new housing and, therefore, building products”. Credit Suisse, Deutsche Bank and Citigroup are managing the share sale. Copyright The Financial Times Limited 2016. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web. Source link