Equipment hire firm upgrades profit forecast

 
Adam Hignett
EQUIPMENT rental firm Ashtead, upgraded its full year profit forecasts yesterday following strong results for the nine months ending 31 January.

The British company saw strong growth in its Sunbelt division which benefited from the improved US housing market, an area where the subsidiary gained market share.

The company has committed to £783m in capital expenditure so far this financial year, with more expected. Expenditure was partially offset by the £701m in proceeds from disposals.

The firm also spent a further £162m on 15 bolt-on purchases during the period as it sought to diversify into specialty markets.

The high expenditure has been paying off as group revenue increased by 23 per cent during the nine month period to 31 January at £1.5bn compared to the previous year, with pre-tax profits up by a third to £379m, on a constant exchange rate basis.

The company said it now anticipates a full year result ahead of its previous expectations, the third consecutive quarter forecasts have been raised.

Despite this, shares closed down 2.03 per cent in London yesterday.

Analysts warned that heightened expectations and an already high valuation for the company relative to earning could lead to an adverse reaction from the market if expectations are not met.

Shares in the company declined slightly to close down ** on the news.