March 8, 2011 / 7:49 AM / 7 years ago

UPDATE 2-Ashtead sees 2011 ahead of expectations

* 2011 Q3 loss 1.7 mln stg vs 12 mln stg Q3 loss in 2010

* 9 month pretax profit 28.3 mln stg vs 8.1 mln stg

* Sees full-year outcome exceeding earlier expectations

* Shares up 6.0 percent

(Adds details, CEO, analyst comments and share price)

By Neil Maidment

LONDON, March 8 (Reuters) - British industrial equipment hire company Ashtead (AHT.L) narrowed its third quarter loss as wary contractors chose to rent rather than buy equipment and now expects full-year results to exceed its expectations.

The FTSE 250 company, which hires out equipment from diggers to small tools, on Tuesday posted a pretax loss of 1.7 million pounds ($2.76 million) for the three months to the end of January, compared to a 12 million pounds loss in the same period in 2010.

“Q3 is never going to be a stellar quarter for us but the periods of losing 12 million pounds in the quarter -- I think we have shifted away from that,” Ashtead Chief Executive Geoff Drabble told Reuters, adding that Q3 trading is historically difficult due to Christmas, Thanksgiving and adverse weather.

Ashtead said the upturn in rentals has come from contractors choosing to rent rather than buy equipment during a tough economic environment, coupled with increasing their fleet and getting better prices for it.

“Based on our third quarter performance which continued in February, it is now likely that the full year outcome will exceed our earlier expectations,” Drabble said.

According to a Thomson Reuters I/B/E/S poll, forecasts from nine analysts are for full-year pretax profit to end of April, 2011, of 20.42 million pounds.

Shares in the company, which have more than doubled in a year, were up 6.0 percent at 0936 GMT.

    “In July last year our 2011 pretax forecast stood at 12 million pounds. Yesterday it was 20 million, and after today’s announcement it is likely to rise to 25-30 million,” Evolution Securities analyst Philip Sparks wrote.


    In the United States, where the company generates 80 percent of revenue, third-quarter rental growth grew 11 percent on revenues from its Sunbelt unit up 7 percent to 811 million dollars.

    “Our 11 percent revenue growth in North America is not because there are suddenly loads of houses or office blocks being built, it’s around the fact that there is effectively just more outsourcing,” Drabble said.

    The company said net debt stood at 774 million pounds at Jan. 31, 2011 compared to 829 million pounds in April, 2010.

    Ashtead said its pretax profit for the first nine months of its fiscal year stood at 28.3 million pounds, up from 8.1 million pounds at the same point in 2010. ($1=.6160 pounds) (Reporting by Neil Maidment; editing by Rhys Jones and Mike Nesbit)

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