Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1716
    +0.0022 (+0.19%)
     
  • GBP/USD

    1.2626
    +0.0004 (+0.03%)
     
  • Bitcoin GBP

    55,430.80
    -571.72 (-1.02%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

U.S. construction rebound helps Ashtead outperform peers

(Adds CEO comments, further details)

By Li-mei Hoang

LONDON, Sept 2 (Reuters) - Rebounding U.S (Other OTC: UBGXF - news) . construction markets helped British industrial equipment hire group Ashtead report strong quarterly results on Wednesday, outperforming its rivals and sending its shares to the top of the FTSE 100 leaderboard.

Construction spending in the United States has increased for eight straight months and rose in July to the highest level in just over seven years, data showed on Tuesday.

That provides a big boost to Ashtead, which generates far more revenue from the construction industry than the under-pressure oil and gas sector, unlike some of its peers. Shares (Berlin: DI6.BE - news) in the group leapt by more than 6 percent on the trading update.

ADVERTISEMENT

Chief Executive Geoff Drabble told Reuters he expected the strong demand to continue for its equipment, which ranges from small tools to large diggers and water pumps. The company said it was on track to achieve its full-year expectations.

Its optimistic outlook contrasts with U.S. peer United Rentals and British rivals Speedy Hire (LSE: SDY.L - news) and HSS Hire, which all downgraded their full-year forecasts due to fears about a slowdown in U.S. growth and subdued activity in the oil and gas industry.

"People are trying to make an awful lot more out of the contagion of oil and gas and pressure of energy prices, I think its massively overdone as witnessed by these results," said Drabble. "(In construction) we're seeing lots of projects continuing to start."

Ashtead's pretax profit rose 23 percent to 161 million pounds ($246.5 million) for its first quarter ended July 31, at constant exchange rates. Rental revenue rose 20 percent to 539.6 million pounds, with oil and gas equipment accounting for just 3 percent.

The company did not give specific full-year forecasts, but analysts expect pretax profit to rise about 25 percent to 610 million pounds, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data.

"Despite concerns over comments from its main peer (United Rentals) and wider concerns on the U.S. macro outlook, this was another strong quarter of growth," said Investec (LSE: INVP.L - news) analyst Andrew Gibb in a note.

"The group continues to take market share, its end markets are still in recovery mode and importantly, structural growth is still prevalent."

Ashtead, which makes 85 percent of its revenue from U.S. division Sunbelt, said the region grew by 23 percent in the first quarter. Revenue at its British division A-Plant rose 11 percent.

Shares in the company were up 6.1 percent at 1015 GMT.

($1 = 0.6532 pounds)

(Editing by David Holmes and Pravin Char)