Equipment hire group Ashtead topped the FTSE 100 leaderboard yesterday, bucking the woes of the wider sector to unveil encouraging first-quarter results.
The company, which derives 85 per cent of its revenues from its North American business Sunbelt, reaped the rewards of the continued US construction recovery as it posted a 20 per cent rise in revenue to £539.6m. Pre-tax profits were up 23 per cent to £160.7m, and Sunbelt’s revenues rose 23 per cent to £528.6m.
Fortunately for Ashtead, only three per cent of Sunbelt’s revenues come from the oil and gas sector, which has seen a decline in activity this year due to the falling fuel prices.
Shares soared by more than six per cent in early trading and closed 7.74 per cent higher at 988p.
“The shares have lost considerable ground over recent months, driven by general market turmoil and concerns about US trading,” said Panmure Gordon analysts.
“It appears that trading in the North American market remains robust and talk of any downturn premature.”
Ashtead said it is on track to meet full-year expectations.
The market-cheering results contrast with UK peers Speedy Hire and HSS Hire, which recently issued profit warnings. Ashtead has benefitted from its US exposure, as uncertainty around the General Election dampened the UK construction market.
“Ashtead is delivering with consistency. In time the effect of oil and gas easing will likely be seen as an aberration,” said Stifel analysts.