Ashtead Group Plc, a U.K. equipment-rental company operating the Sunbelt Rentals brand, expects to benefit with a shift 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 credit crisis, 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 today in a statement.
While U.S. construction markets are still “challenging,” more companies are renting equipment because of tight financing and worries about the economy, which means Ashtead can gain business in the country, 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 shares fell 9.6 pence, or 5.4 percent, to 168.4 pence in London, their biggest decline since March 10. The shares have fallen 2.6 percent this year, giving the company a market value of 847.6 million pounds ($1.4 billion).
Drabble said 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. market for construction equipment, little changed in the past few years, he said.
Net income 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, in the previous year, according to the Ashtead statement.