* Q3 pretax profit 53.8 mln stg vs 20.6 mln in 2012
* Sees FY profit ahead of its earlier expectations
* Increases 2013 fleet expenditure by 10 pct to 550 mln stg
* Strong trading continued into February
* Shares up 7.5 pct, top FTSE 250 riser
By Neil Maidment
LONDON, March 5 British industrial equipment
hire group Ashtead raised its full-year profit
expectations after strong demand in the United States helped it
more than double profit in its third quarter.
Ashtead, which makes 85 percent of its revenue from U.S.
division Sunbelt, said on Tuesday pretax profit for the third
quarter to Jan. 31 was 53.8 million pounds ($81 million), up
from 20.6 million pounds in 2012, and easily ahead of analyst
Shares in the firm, which have risen 66 percent in the last
six months, were up 9.25 percent to 573.5 pence at 1024 GMT,
making it the top riser on the FTSE 250 index.
Ashtead, which rents everything from small tools to large
diggers and water pumps, has grown fast over the past few years
as hard-up customers in the United States and Britain have
turned to hiring equipment rather than buying and maintaining
The firm has also benefited from an ability to invest in
fleet at a time when credit is tight for its rivals, allowing it
to secure work at higher prices and take market share.
"There is huge opportunity for further growth that is
predominantly going to come through organic growth," chief
executive Geoff Drabble told Reuters.
"There will be a little bit of bolt on M&A but the main
story is organic growth, which is risk-free, high return, and as
a result we are feeling pretty good about the future," he said.
Analysts at Numis raised its full-year profit forecast by 9
percent to 235 million pounds, and by 7 percent to 275 million
pounds for 2014. "The structural story remains a strong one and
with the benefit of cyclical recovery we may not have seen the
end of the earnings upgrades," Numis analysts said.
The American Rental Association believes the $26 billion
rental market will grow by 8 percent each year from 2012-16 as
construction activity there makes a slow recovery. Ashtead is
the No. 2 player in America with a market share of 7 percent.
While government-led construction is subdued, the housing
market is no longer a drag on the U.S. economy and residential
construction contributed to growth in 2012 for the first time
since 2005, signalling more work for firms like Ashtead.
Ashtead's revenue rose 26 percent to 333.9 million pounds in
the third quarter, with U.S. sales up 27 percent on strong
residential and industrial oil and gas markets, as well as a
one-off benefit of recovery work post Hurricane Sandy.
Rental revenue in the UK grew by 11 percent, while pretax
profit for the first nine months of the year rose 85 percent to
a record 194.5 million pounds.
Ashtead said it would increase its full-year fleet capital
expenditure plans by 10 percent to 550 million pounds, and added
that strong trading had continued in February.
In January, United Rentals Inc, the world's biggest
equipment rental firm, posted better-than-expected fourth
quarter results but warned that it expected annual revenue to
come in below analysts' estimates.
Ashtead said its business had been boosted by disruption at
United Rentals, which is busy integrating the acquisition of RSC
Holdings, in part through store closures. Drabble said this
benefit was likely to continue for another 12-18 months.