* H1 pretax profit up 66 pct to 141 mln stg
* H1 revenue up 17 pct to 680 mln stg
* Analysts say firm could reach FTSE 100 in 5 years
* Shares flat after touching new high
By Christine Murray
LONDON, Dec 11 Equipment hire group Ashtead
posted record first-half profit as U.S. construction
firms, struggling to secure credit to buy expensive diggers and
tools, rented them instead.
The British group, which makes 85 percent of its revenue
from U.S. division Sunbelt, said on Tuesday it had seen a modest
pickup in the U.S. construction market in the last quarter.
However, the need to reduce the country's deficit remains a
concern for customers and the firm said that even if the market
did recover more strongly, there were signs of lasting switch
towards renting equipment rather than buying it.
"We've had three fantastic years of growth at a time when
the market has gone backwards," chief executive Geoff Drabble
told Reuters, hailing a "structural shift" among customers keen
to avoid dealing with storage, breakages and regulations.
Ashtead specialises in renting equipment from large diggers
to small tools, and provided industrial water pumps for the huge
clean-up effort after Hurricane Sandy in New York,
It posted a first-half pretax profit of 141 million pounds
($227 million), up 66 percent on the same period last year.
"It is genuinely conceivable to imagine this as a FTSE 100
company in the next 3 to 5 years," said Jefferies analyst Justin
Jordan, upgrading his profit forecasts for the company for the
next three years by 14 percent.
On current valuations, that would require Ashtead to grow
its market value to over 3 billion pounds from 1.9 billion.
At 1120 GMT its shares, which have risen over 70 percent
this year, were little changed at 389.7 pence, having earlier
touched a new high of 413 pence.
The American Rental Association believes the $26 billion
rental market will grow by 8 percent each year from 2012-16.
Ashtead has a 6 percent market share, suggesting plenty of
room for growth.
"There's no question that the company now has significant
momentum, it has the resources to expand organically and through
more acquisitions," said Seymour Pierce analyst Kevin Lapwood.
But Drabble said he would not stretch the group's finances.
"Sure as anything one day I will endure a cyclical downturn
and at that point in the cycle low leverage makes a significant
difference," he said in a telephone interview.