Ashtead Group PLC (LON: AHT) expects its annual results to beat expectations after first-half profit grew a fifth, boosted by an especially strong performance from its US Sunbelt unit.
The equipment rental firm on Tuesday reported a 19% rise in underlying pretax profit to £633.4mln in the six months to the end of October on revenue 18% higher at £2.07bn.
Ashtead’s US Sunbelt business, which accounts for a large proportion of its overall sales, pulled in up to US$20mln of additional revenue following clean-up efforts in the country after Hurricanes Florence and Michael.
The group, which offers diggers, construction tools and other industrial equipment for hire, said it now expects full-year results to be ahead of its prior expectations and that the outlook is positive over the medium-term.
The company invested £1.06bn capital and a further £362mln on bolt-on acquisitions during the period which has added 80 locations and resulted in a rental fleet growth of 15%, it said.
“This investment reflects the structural growth opportunity that we continue to see in the business as we broaden our product offering and geographic reach, and increase market share,” CEO Geoff Drabble said in a statement.
“Our business is performing well in supportive end markets. Accordingly, we expect full year results to be ahead of our prior expectations and the Board continues to look to the medium term with confidence,” he added.
Shares in Ashtead were 5% up at 1,689p in early deals.
“It may well be that Ashtead’s fortunes remain largely welded to prospects in the US, yet the share price performance over the last year has not reaped the benefit of earlier economic success, having fallen 20%, as compared to a 10% drop in the wider FTSE100,” said Interactive investor analysts.
“Even so, the general view of the company is rather more reflective of both performance and outlook, with the market consensus coming in at a strong ‘buy’,” they added.