(Reuters) - Equipment rental giant Ashtead Plc (L:AHT) reported higher first-quarter profit on Tuesday, as its U.S. Sunbelt business benefited from higher rental demand for industrial gear.
The FTSE 100 company, which rents out diggers, construction tools and other equipment, said underlying pretax profit rose 9% to 319 million pounds in the three months ended July 31, compared to analysts' expectations of 317 million pounds.
Rental revenue rose 16% to 1.16 billion pounds, on a constant currency basis.
Ashtead gets around 90% of its sales and profit from the United States, through its Sunbelt unit, with the rest largely coming from the company's A-Plant business in Britain.
The company's results follows a bumper 2018-19, with Ashtead seeing an uptick in construction companies choosing to rent equipment instead of buying, and as U.S. construction activity boomed.
Ashtead said it spent 125 million pounds under its share buyback programme in the quarter, and expects to spend a minimum of 500 million pounds on share buybacks this year.
"We expect business performance in line with our expectations and the board continues to look to the medium term with confidence," the company said in a statement.
However, U.S. construction spending recently fell and analysts warn that it could hit usage of Ashtead's equipment and potentially hurt prices and margins.
U.S. manufacturing activity contracted for the first time in three years in August, with new orders and hiring declining sharply as trade tensions with China weighed on business confidence, raising financial market fears of a recession.