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Sept 12 (Reuters) - Industrial equipment hire group Ashtead Group said the major clean-up and rebuilding programme that will be needed in the United States after Hurricanes Harvey and Irma will generate more demand for its diggers and tools.
“It is too early to attempt to quantify the impact of Hurricanes Harvey and Irma accurately on our business. However, it is evident that it will result in an increase in demand for our fleet,” Chief Executive Geoff Drabble said.
“Looking forward, as a minimum, we expect that the impact will help to underpin the current market assumptions in our 2021 plan,” he added.
Shares in Ashtead were up 5.2 percent at 1771 pence at 0713 GMT, making the stock London’s top blue-chip gainer.
Ashtead, which hires out its tools on short-term contracts, said underlying pretax profit rose to 238 million pounds ($313.92 million) for the first quarter ended July 31, from 184 million pounds a year ago.
Underlying rental revenue rose 17 percent to 828.8 million pounds.
Ashtead’s U.S. division Sunbelt Rentals, which accounts for 87 percent of revenue, reported a 15 percent rise in sales to $983 million pounds. A-Plant, its UK division which makes up the remainder of its earnings, reported a 23 percent rise in revenue to 119 million pounds.
“Whilst management is clearly taking a cautious view on forward forecasts and the potential impact of the hurricane season, it is clear that momentum is strong in the business and that risks to earnings remain firmly on the upside,” said RBC analysts, who rate Ashtead as “outperform”.
Rival United Rentals Inc, which has more exposure to the challenged oil and gas sector, reported better than expected results for the quarter to June 30 as underlying rates improved.
Ashtead shares have gained more than 35 percent since the U.S. elections on an expectation that President Donald Trump will deliver on his plans to spend $1 trillion on roads and bridges, however, his plan is yet to be put into action. (bit.ly/2wUOXhN)
At the same time, recent data showed that U.S. construction spending unexpectedly fell in July, hitting a nine-month low amid a steep decline in investment in private structures. ($1 = 0.7582 pounds)
Reporting by Noor Zainab Hussain and Esha Vaish in Bengaluru, editing by Louise Heavens