LONDON, June 20 (Reuters) - Equipment rental firm Ashtead posted an 87 percent jump in profit on Thursday and raised its forecast for 2014, reaping the rewards of a structural shift to renting in its core U.S. construction market.
The firm, which hires out diggers and power tools on short term contracts, made an underlying pretax profit of 247 million pounds ($386.80 million), ahead of analyst forecasts of 237 million. Revenue grew 19 percent to 1.36 billion pounds.
“With this momentum established in the business, cyclical recovery still to come and a strong balance sheet to support growth opportunities, we anticipate that our profits in the coming year will be ahead of our earlier expectations,” the firm said in a statement.
Ashtead, which gets more than 95 percent of its operating profit from its U.S. operation Sunbelt Rentals, said it spent 521 million pounds in 2012 renewing its fleet of equipment, but added that in 2013 it would divert more capital expenditure towards “growth”.
The firm’s confidence comes from improving U.S. construction data, the American Rental Association predicting 6.9 percent industry revenue growth in 2013, and a relatively young fleet of equipment.
In a Thomson Reuters poll of 15 analysts, just one had a “hold” rating and none had a “sell”.
Ashtead is now moving towards providing more equipment for higher margin speciality services such as pump and power and scaffolding, possibly through bolt-on acquisitions.
Shares in the firm were the fourth highest riser in the FTSE 250 in the last year, up 167 percent, and hit an all time high of 675 pence in May.