Crestchic lifts expectations for third time this year

The AIM-traded company said it had benefited from extensions to ongoing rental projects in a number of global locations, had secured its “largest-ever” hire contract to benefit both the second half of 2022 and the first quarter of 2023, and had enjoyed a “record level” of sales orders, the majority of which would be fulfilled in 2023.

It said the record contract win, as well as its “strong” ongoing trading, had again led the board to “significantly increase” its profit expectations for the year as a whole.

The move marked the third increase in expectations the group had announced in 2022.

“Moreover, since a significant proportion of the work secured over the past two months will continue into next year, the board is increasingly confident that the growth achieved this year represents a sustainable step change in the underlying performance of the group,” the directors of Crestchic said in a statement.

“Additionally, the expanded factory capacity along with the new depots in Texas and Antwerp will underpin the key strategy of growing hire and sales revenue around the world, particularly in North America and Europe.”

Crestchic said all of its market sectors were continuing to perform strongly, as it invested in and benefited from servicing high levels of data centre activity globally and, even more than expected, activity in the oil and gas exploration sector, particularly in the Middle East and Asia, has grown substantially as national energy strategies responded to political uncertainty and “dramatic increases” in fossil fuel prices.

“Equipment utilisation is at an all-time high and Crestchic's ability to manage the hire fleet and redeploy it on a global basis has been a critical factor in enabling the company to win major international hire projects.

“Inflation and supply chain challenges remain and will constrain to some extent the pace at which the group can invest in the hire fleet to meet demand, but the group has responded by accelerating the purchasing and refurbishment of used equipment, which has proven to be quick and cost effective as well as environmentally responsible.

“The group is working closely with its customers to enable input cost increases to be sensitively passed on while maintaining our margins on equipment sales.”

Crestchic said it remained “very confident” in its strategy, the strength of its markets and its prospects for continued growth.

Additionally, Crestchic announced on Tuesday that contracts had now been agreed for the sale of the Tasman business in the Middle East, and a deposit had been received from the purchaser.

The transaction was expected to be completed “imminently”, once local regulatory approvals were received.

“The provisions made in the 2021 final results, when the assets of Tasman were transferred to hold for sale, are sufficient to ensure that no related exceptional costs will be required in 2022.”

Crestchic said it would announce its interim results on 29 September.

At 1257 BST, shares in Crestchic were up 19.26% at 233.75p.

Reporting by Josh White at Sharecast.com.