US resilience boosts Ashtead

Demand at Sunbelt looks especially robust and, to meet it, the rental fleet was expanded to $2.7bn (£1.67bn) in value - with fleet on rent growth of 10 per cent year on year. Accordingly, divisional revenue rose 20 per cent in the period to £576.8m, while operating profit jumped from £108m to £161m - helped by rising utilisation levels and a focus on efficiency. In fact, investment in the group's rental fleet increased £88m year on year to £341m, which lifted the value of the group's fleet to £2.1bn, with £500m of spend being targeted for the full year. That helped reduce the average age of its kit from 39 months to 32 months, too.

Progress in the UK's A-Plant unit, meanwhile, was more modest - there was a slight fall in utilisation levels, although divisional revenue rose 11 per cent to £103.6m, and the unit's operating margin improved by 1.5 percentage points to 7.1 per cent. But group underlying pre-tax profit still rose sharply - from £84.4m a year ago to £140.7m - and the group operating margin improved by five percentage points to 24 per cent. Sunbelt's operating margin is higher still and rose by 5.4 percentage points in the period to 27.8 per cent.

To fund the increasing investment in new kit, the debt pile has grown - from £889m to a chunky £1.07bn. But borrowing costs fell sharply after the group refinanced $500m of long-term debt at 6.5 per cent - rather better than the previous 9 per cent rate. This refinancing cost £18m in one-off charges, but is estimated to save £8m a year in interest.

That backdrop of good news led broker Peel Hunt to upgrade forecasts and has upped its adjusted full-year pre-tax profit estimate from £185m to £210, meaning a 14 per cent EPS uplift to 26.8p (from £130.6m and 16.9p in 2012).