By Li-mei Hoang
LONDON (Reuters) - Improving U.S. and British construction markets helped equipment hire group Ashtead (L:AHT) to report a record high in pretax profit and should enable it to maintain momentum, the company said on Tuesday.
Expressing confidence in the company's medium-term prospects, Chief Executive Geoff Drabble said it was benefiting from increased demand for commercial properties on both sides of the Atlantic.
"We still remain very early cycle in construction markets... We are seeing far more activity levels, we are seeing bigger scale projects, we are starting to see some of those signature projects," he told Reuters.
The company rents out everything from small tools to large diggers and water pumps and has grown rapidly over the past few years as hard-up customers have turned to hiring equipment rather than buying and maintaining it.
Pretax profit rose to 490 million pounds ($764 million) for the year ended April 30, up from 362 million pounds a year ago and just ahead of analyst expectations.
It will pay a total dividend for the year of 15.25 pence per share, up by 33 percent.
Drabble said the company had performed strongly in the United States, its largest market, despite the impact of bad weather and the dampening effect of lower oil prices in the fourth quarter.
Rental revenue in the company's U.S. division Sunbelt, which accounts for around 85 percent of group revenue, grew 25 percent to 1.7 billion pounds. Its UK business A-Plant, which accounts for the remainder, grew by 19 percent to 323 million pounds.
Drabble said he planned to invest around 1 billion pounds in capital expenditure in the coming year, to help broaden the company's operations and expand its fleet, which is worth 3.6 billion pounds.
Shares in the company were 2.3 percent lower at 1,101 pence by 0822 GMT.
"Despite a difficult winter in the US and a slowing oil and gas market, Ashtead delivered another strong performance," said Barclays (LONDON:BARC) analysts in a note.
"We remain confident in the outlook for Ashtead in recovering non-residential construction markets in both the U.S. and the UK," they added.
($1 = 0.6411 pounds)