Ashtead Group Plc (AHT), a U.K. equipment- rental company operating the Sunbelt Rentals brand, expects to benefit from buying to renting construction-gear in the U.S., its biggest market, Chief Executive Officer Geoff Drabble said.
In the U.S., rentals have risen to 40 percent of the construction equipment market from 25 percent before the bank crash, Drabble said. Rentals may account for half of that market in a few years, he said. Full-year profit dropped as results included one-time costs for the early redemption of senior secured notes, the London-based company said in a statement.
While U.S. construction markets are still “challenging,” more companies are renting equipment due to tight financing and worries about the economy, which means Ashtead can gain business there, where it generates 85 percent of its sales, Drabble said.
“Yes, we are a cyclical business, but we can outperform the industry,” he said in a telephone interview.
Ashtead fell 8 pence, or 4.5 percent, to 170 pence at 9:04 a.m. in London. The shares have fallen 1.6 percent so far this year, giving the company a market value of 856 million pounds ($1.4 billion).
Drabble thinks the U.S. market is close to the bottom, citing a fourth-quarter 6 percent gain in equipment rentals. The U.K. market will probably contract, as government-spending cuts take effect, he said. Drabble said Ashtead expects a “gentle improvement in profit.”
Rental represents 75 percent of the U.K. construction- equipment market, little changed over the past few years, he said.
Net profit was about 900,000 pounds, or 0.2 pence per share in the year ended April 30, compared with 2.1 million pounds, or 0.4 pence per share in the previous year, according to the Ashtead statement.
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