Ashtead Q1 profit up

LONDON (Reuters) - Equipment hire firm Ashtead Group (AHT.L) posted strong growth in first quarter profits, saying it expects trading in line with expectations for the rest of the year despite a weakening outlook in the construction sector.

It said underlying pretax profit rose 26 percent to 35.9 million pounds for the three months to July 31, on revenue up 5 percent at 259.5 million.

"Despite the current economic uncertainty, our operating businesses continue to perform well and our financing costs continue to be lower than last year as we reduce debt," Chief Executive Geoff Drabble said in a statement on Tuesday.

Ashtead, which leases equipment from forklift trucks to ladders, said it is on track to meet its targets of reducing net debt to 785 million pounds by April 2009. The company, which has a highly leveraged position, reduced its net debt by 111 million pounds in the quarter to 852 million pounds at the end of July.

The disposal of A-Technology, its oil related rental business, will contribute 90 million pounds to paying down debt, it added.

Shares in Ashtead closed at 77.25 pence on Monday, valuing the company at around 394.3 million pounds.

(Reporting by Lorraine Turner; editing by Rory Channing)