Industrial equipment hire company Ashtead Group plc (LON:AHT) reported a 7% increase in full year profit, driven by strong demand in the US.
Ashtead, which stands to benefit from US President Donald Trump’s plans to boost infrastructure spending, posted underlying pre-tax profit of £793.4mln in the year to 30 April 2017, compared to £645.3mln the prior year.
Rental revenue increased 13% to £2.9bn on an underlying basis at constant currency from £2.2bn a year ago, supported by a rebound in US construction markets and growth in its UK business.
In the US, Ashtead has outperformed rival United Rentals Inc, which in April warned that rental rates remained under pressure.
US equipment rental revenue in 2017 is expected to rise 7% year-on-year to US$49.4bn, according to estimates provided by the American Rental Association in May.
"Looking forward, our markets remain good and spring has seen a good seasonal uplift in fleet on rent, with record levels of physical utilisation for this time of year," Ashtead chief executive Geoff Drabble said in a statement.
Drabble said the company has continued to see an increasing number of customers opting to rent rather than buy equipment.
Ashtead spent £437mln on bolt-on acquisitions in the year and £48mln on share buybacks. It expects to see the full benefit of its investments in the coming year.
Ashtead raised its full year dividend 22% to 27.5p from 22.5p the previous year.
Shares in Ashtead rose 1.07% to 1,658.64p in late morning trading.
Liberum analysts reiterated a 'buy' rating and target price of 1,940, citing a "solid finish" to fiscal year 2017 and confident outlook.
"With the company delivering an in line set of FY17 results, we expect the market to focus on the long-term upside offered by increased rental penetration in the US market," Liberum said.
The broker believes Ashtead is "well placed" to deliver 9% per year of underlying revenue growth.