Equipment rental firm Ashtead enjoyed a profit boost of nearly a tenth over the summer, as its US business Sunbelt cashed in on higher demand for leasing industrial gear.
The FTSE 100 company has reaped the benefits of construction firms choosing to rent equipment instead of buying in recent years.
Pre-tax profit was £304.7m for the three months ending 31 July, an eight per cent increase on the first quarter last year.
Revenue rose 17 per cent to £1.28bn, while earnings per share were up 12 per cent to 49.1p.
Net debt rose to £5.16bn, up on £3bn at the same time last year. This was a result of extra investment in the company’s fleet of vehicles and equipment, several bolt-on acquisitions made over the course of the year and adoption of new accounting standards, which added more than £880m to debt levels at the start of May.
Why it’s interesting
Ashtead’s US Sunbelt business drove the company’s growth, with revenue in the division increasing 18 per cent to $1.38bn (£1.12bn).
Revenue at its UK A-Plant division grew to £131.4m for the quarter, up on £125m this time last year.
Shares fell 1.8 per cent today, however, a reflection on economic concerns across the globe.
AJ Bell investment director Russ Mould said: “Ashtead’s first-quarter sales and profit figures are in line with the forecasts for the full-year put out by the management team alongside June’s full-year results but the shares are down, to partly reflect their recent good run to within a whisker of late 2018’s all-time highs but also niggling worries over the macroeconomic outlook.”
What Ashtead said
Chief executive Brendan Horgan said: “Our north American end markets remain strong and we continue to execute well on our strategy of organic growth supplemented by targeted bolt-on acquisitions.
“We invested £521m in capital and a further £196m on bolt-on acquisitions in the period, which has added 27 locations across the group.
“This investment reflects the structural growth opportunity that we continue to see in the business as we broaden our product offering, geographic reach and end markets, thus increasing market share and diversifying our business.”