INDUSTRIAL equipment hire firm Ashtead has raised profit expectations for the second time this year after a strong first half, boosted by cash-strapped customers in its core US market choosing to rent rather than buy.
The FTSE 250 firm, which in September raised full-year expectations after more than doubling first quarter profit, continued the trend with pre-tax profit for the three months to 31 October rising to £50.6m from £18.1m in 2010.
Ashtead, which makes over 80 per cent of profit from its US rental unit Sunbelt, said pre-tax profit for the first half of the year was £84.4m, up from £30m. It now anticipates full-year profit to be “substantially ahead of its earlier expectations”.
Despite the gloomy economic outlook gripping its British and US bases the firm, which hires out equipment from diggers to small tools, has seen cost conscious customers look to rent rather than buy expensive items and competitors struggling for finance unable to match its scale and prices.
“Market share gains, the on-going structural shift to rental in the US and operational efficiency meant we delivered a very strong performance across a broad range of metrics despite end construction markets being at a cyclical low point,” said chief executive Geoff Drabble.
Shares in Ashtead, which raised its interim dividend by 7.6 per cent to 100p, closed up 13.8 per cent at 211.7p yesterday.
City A.M. Reporter