250-listed equipment rental firm Ashtead yesterday said it believes full-year profit will hit the upper end of expectations, after the US construction recovery boosted first-half results.
The company posted a 49 per cent rise in pre-tax profit to £212m for the first half of the year and a 23 per cent increase in revenue to £849.7m.
US construction rental unit Sunbelt – which makes up 85 per cent of Ashtead’s business – was once again the main driver of growth. “There is a very strong and steady recovery going on in both the residential and non-residential construction markets in the US,” chief executive Geoff Drabble told City A.M. “I expect we will see many more years of recovery, similar to the one in the 1990s.”
Ashtead has raised its dividend by 50 per cent to 2.25p per share and has increased its full-year capital guidance to £700m. Earnings per share rose by 50 per cent to 26.7p.
Drabble was a little more reticent on the UK’s construction recovery.
“I think the UK is lagging two years behind the US, but we’re over the worst now,” he said.
Ashtead mainly has a strategy of organic growth, but Drabble said some small, bolt-on acquisitions in the US or the UK could be a possibility and that the company “is in talks with people all the time”.
“First half results from Ashtead are nothing short of sparkling, with results all down the line better than our expectations,” said broker Panmure Gordon. “Despite a number of previous upgrades, a 50 per cent increase in earnings per share and dividend has still been delivered, and with increased guidance on capital expenditure for the full year and on-going momentum into the third quarter, future prospects look very bright indeed.”
Shares climbed 3.7 per cent.