(Reuters) - British industrial equipment hire group Ashtead Group Plc reported on Tuesday a 7 percent rise in full-year profit, boosted by strong growth in its core North American unit as well as its UK business.
The company, which hires out diggers and tools on short-term contracts, said underlying pretax profit at constant currency rose to 793.4 million pounds in the year to April 30, from 645.3 million pounds a year ago.
Underlying rental revenue at constant currency gained 13 percent to 2.90 billion pounds.
“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.
Ashtead has benefited from the rebound in U.S. construction markets and has outperformed peer United Rentals Inc which has greater exposure to the struggling oil and gas sector and in April warned rental rates remained under pressure.
The American Rental Association forecast in May that U.S. equipment rental revenue would reach $49.4 billion in 2017, up 4.5 percent over the preceding year.
“With the company delivering an in line set of (full-year) results, we expect the market to focus on the long-term upside offered by increased rental penetration in the U.S. market,” Liberum analysts wrote.
The brokerage, which has a “buy” rating and a target price of 1,940 pence on the stock, said the firm was well-placed to deliver 9 percent annual underlying revenue growth and further improve its “sector leading” margin.
Ashtead said on Tuesday that its end markets remained strong and it continued to see an increasing number of customers opting to rent equipment, allowing greater flexibility.
The company, which spent 437 million pounds on bolt-on acquisitions in the year and 48 million pounds on share buybacks, said it continued to execute on its strategy of capturing growth via organic ventures and bolt-on acquisitions.
Jefferies analyst wrote that the firm had considerable flexibility for further M&A, increased dividends and/or stock buybacks.
Reporting by Esha Vaish in Bengaluru; Editing by Subhranshu Sahu and Sunil Nair