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Ashtead quarterly profit rises, bolstered by strong U.S. rental demand

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(Reuters) - Equipment rental giant Ashtead Plc (AHT.L) reported higher first-quarter profit on Tuesday, as its U.S. Sunbelt business benefited from higher rental demand for industrial gear.

The FTSE 100 company, which rents out diggers, construction tools and other equipment, said underlying pretax profit rose 9% to 319 million pounds in the three months ended July 31, compared to analysts’ expectations of 317 million pounds.

Rental revenue rose 16% to 1.16 billion pounds, on a constant currency basis.

Ashtead gets around 90% of its sales and profit from the United States, through its Sunbelt unit, with the rest largely coming from the company’s A-Plant business in Britain.

The company’s results follows a bumper 2018-19, with Ashtead seeing an uptick in construction companies choosing to rent equipment instead of buying, and as U.S. construction activity boomed.

Ashtead said it spent 125 million pounds under its share buyback programme in the quarter, and expects to spend a minimum of 500 million pounds on share buybacks this year.

“We expect business performance in line with our expectations and the board continues to look to the medium term with confidence,” the company said in a statement.

However, U.S. construction spending recently fell and analysts warn that it could hit usage of Ashtead’s equipment and potentially hurt prices and margins.

U.S. manufacturing activity contracted for the first time in three years in August, with new orders and hiring declining sharply as trade tensions with China weighed on business confidence, raising financial market fears of a recession.

Source - Reuters

About the author

Philip Scott

Head of Equities, Director

Philip has worked as a Private Client Stockbroker for nearly 20 years, commencing his career in Operations with Rensburg Sheppards (now part of Investec plc) before spending 9 years with Killik & Co advising on and directly managing portfolios. He joined SI Capital in 2006 to head up the Private Client Advisory desk.

Philip is a regular contributor to local media commenting on stock market dynamics and is a Chartered Member of the Chartered Institute for Securities & Investment (MCSI). His RDR qualification gained special recognitionfrom the CISI for achieving the highest combined pass mark in the country for the Investment Advice Diploma in 2012.

“At SI Capital I enjoy being part of a talented team who collectively share the same desire to provide excellence in service.  My focus is to ensure that each client receives effective and optimal management of their assets.”

Philip lives locally, is married with 2 daughters and is an avid sports fan (if now predominantly from the sidelines).  His other interests include music and film.

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