Industrial equipment hire group Ashtead tops the Footsie with 5% share price rise as revenues and profits jump

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Industrial equipment hire firm Ashtead was the top FTSE 100 riser today with shares up more than 5 per cent as it reassured investors with strong revenue growth and rising profit at the start of its financial year.

The group, which rents out everything from small tools to large diggers and water pumps, said total group revenues soared 26 per cent to £618.6million in its first quarter to the end of July. Pre-tax profit also jumped 23 per cent to £155.4million in the three month period.

The results reassured investors, especially after recent poor performances from rivals HSS Hire and Speedy Hire, both of which lowered their profit expectations for the year, partly because of slower demand from the oil and gas industry.

Upbeat: Ashtead reassured investors with strong revenue growth and rising profit

HSS Hire, which made its debut on the stock market in February, issued a profit warning last week and reported a loss of £14.1million for the first half to June 27, sending shares down by more than 30 per cent.

But investors' enthusiasm about Ashtead's upbeat results spread to its mid cap rivals, with HSS's share price soaring 3 per cent, or 1.88p higher to 64.38p, and shares in Speedy 2.1 per cent higher, up 1p to 48p.

Ashtead were 5.3 per cent, or 48.75p higher at 965.75p at lunchtime.  

Ashtead’s biggest slice of sales comes from its US operation Sunbelt, which saw a 29 per cent rise in revenues to £528.6million in the first quarter, while revenues at the group’s UK division A-Plant soared by 11 per cent to £90million.

Ashtead's chief executive Geoff Drabble said: ‘The strength of the quarter reflects the benefits of another strong execution of a consistent strategy to diversify the markets we serve, both in terms of geography and sector.’

He added: ‘Particularly encouraging is that, after a weather-impacted Spring, our seasonal improvement in demand was very strong’.

Drabble said the positive performance gave the group confidence to invest £349million in new equipment, open 19 new rental sites and make one small ‘bolt-on acquisition’.

Ian Forrest, investment research analyst at The Share Centre, said: ‘Overall these are good figures from Ashtead and, perhaps more importantly, very reassuring given the recent news from other parts of the sector.’

He said Share Centre maintained a ‘buy’ recommendation on the stock.

Mike van Dulken, head of research at Accendo Markets, noted that Ashtead shares have bounced back from late August 12-month lows of 838p.

‘However, we likely need to see a break above the 50-day moving average 1000p before bulls get excited about a recovery towards 2015 highs of 1231p. Rent-a-recovery or retreat?’, he added.

Analysts at Peel Hunt said the shares had suffered from fears over oil and gas exposure and recent peer comments.

But, they said: ‘We feel that this has been overplayed and today’s statement should reassure.'

They added: ‘Ashtead remains a quality “growth cyclical” and, with its improving returns profile, we remain positive.’

Ashtead share price is still 20 per cent lower than last year. Although that is not too bad compared to Speedy Hire, down 40.5 per cent on last year, and HSS Hire, which has fallen 70 per cent since its February flotation.