UPDATE 1-Ashtead nudges outlook higher after strong US demand
LONDON Dec 10 (Reuters) - Equipment rental company Ashtead expects full-year profit to hit the upper end of expectations after a turnaround in the U.S. construction market helped it to grow second-quarter pretax profit by 42 percent.
Ashtead has raised its forecasts at every announcement for the past eight quarters, defying an otherwise volatile construction market with bumper growth.
The London-listed company, which hires out diggers and tools on short-term contracts, said a turnaround in the U.S. market and a shift by builders towards renting equipment were driving profits.
Pretax profit for the three months to Oct. 31 rose to 112.8 million pounds ($184.8 million) from 78.9 million pounds a year earlier, beating analysts' forecasts. Revenue was up 23 percent to 439.2 million pounds.
The market update prompted Jefferies analyst Justin Jordan to upgrade his full-year pretax profit forecast by 4 percent to 342 million pounds.
"Right now there's a lot of construction out there, we're very busy and the statistics have caught up with us," said Ashtead Chief Executive Geoff Drabble.
Starts in non-residential construction in the United States are up 13 percent this year, and forecasts for the U.S. construction market for the next two years are good, he said.
Pretax profit at Ashtead's core U.S. brand Sunbelt Rentals, which generated more than 90 percent of the group's profit in the second quarter, rose by 32 percent.
"The UK construction market is a little less certain," Drabble said. "London is a building site, and it feels like we're past the bottom. But the key is for some of the rhetoric in terms of investment infrastructure to come through into hard numbers."
Ashtead said it had raised its interim dividend by 50 percent to 2.25 pence per share and had increased its full-year capital guidance to 700 million pounds.
It is planning to ramp up investment in new fleet as it anticipates a strong spring next year, although Drabble said small "bolt-on" acquisitions could account for some of this year's increased capital expenditure.
Cantor Fitzgerald analysts said a strong performance in Tuesday's trading could see Ashtead promoted to the large-cap FTSE100 index on Wednesday.
Ashtead shares were up around 2.3 percent to 730 pence per share at 0935 GMT.
- Malaysia military tracked missing plane to west coast: source |
- Malaysia air probe finds scant evidence of attack: sources |
- Ukraine appeals to West as Crimea turns to Russia |
- UPDATE 1-Missing Malaysian plane last seen at Strait of Malacca-source
- Freescale loss in Malaysia tragedy leads to travel policy questions