Rental equipment provider Ashtead Group (AHT.L) led the FTSE risers on Thursday after lifting its outlook for full-year performance.
The London-based company reported a 21% rise in revenues to $1.85bn (£1.34bn) for the three months to 31 July, and forecasted annual results ahead of its previous guidance of 6-9% growth.
It now expects overall growth of 13-16%, as Canada and the UK are surpassing initial expectations.
In the UK, Ashtead’s work for the Department of Health (DoH) contributed 34% to its £99m first-quarter revenue in the country, a 24% rise on the prior year.
Meanwhile, rental only revenue in Canada increased 81%, as lockdowns in 2020 severely affected performance.
Overall rental revenue, which makes up 90% of the group total, climbed 22%, while operating profits rose 53% to $477m. Compared to pre-pandemic levels, rental revenue was up 12%.
Shares rose as much as 3% on the back of the news.
Ashtead's chief executive, Brendan Horgan, said: “Our performance continues to illustrate the benefits of our long-term strategy to broaden and diversify our end markets, while maintaining a strong balance sheet.
“In the quarter, we invested $551m in capital across existing locations and greenfields and $123m on five bolt-on acquisitions, adding a combined 29 locations in North America.”
He added: “The benefit we derive from the diversity of our products, services and end markets, our investment in technology and ongoing structural change, enhanced by the environmental and social aspects of ESG, enables the board to look to the future with confidence and we now expect business performance this year to be ahead of our previous expectations.”
Despite the strong trading update, Ashtead, like several companies across the globe, has been hit by supply chain disruptions. It admitted that fleet deliveries were slower than expected, and that it has deferred certain fleet disposals to meet strong demand.
Inability to get new equipment as planned has also meant that the average age of its fleet has increased slightly, it said.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Ashtead is a textbook cyclical company. Renting out industrial and construction equipment means when the economy grinds to halt, so does Ashtead’s business. That’s partly why the numbers look so flattering this quarter against the very tough conditions of last year.
“What’s more impressive is the group’s ramping up of bolt-on acquisitions. Well-executed deals of this kind tend to be good news for the top and bottom line, and it’s testament to the newly helpful market conditions that Ashtead feels able to loosen the purse strings.”