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By Li-mei Hoang
LONDON, Sept 2 (Reuters) - Rebounding U.S. constructionmarkets helped British industrial equipment hire group Ashtead report strong quarterly results on Wednesday,outperforming its rivals and sending its shares to the top ofthe FTSE 100 leaderboard.
Construction spending in the United States has increased foreight straight months and rose in July to the highest level injust over seven years, data showed on Tuesday.
That provides a big boost to Ashtead, which generates farmore revenue from the construction industry than theunder-pressure oil and gas sector, unlike some of its peers.Shares in the group leapt by more than 6 percent on the tradingupdate.
Chief Executive Geoff Drabble told Reuters he expected thestrong demand to continue for its equipment, which ranges fromsmall tools to large diggers and water pumps. The company saidit was on track to achieve its full-year expectations.
Its optimistic outlook contrasts with U.S. peer UnitedRentals and British rivals Speedy Hire and HSSHire, which all downgraded their full-year forecasts dueto fears about a slowdown in U.S. growth and subdued activity inthe oil and gas industry.
"People are trying to make an awful lot more out of thecontagion of oil and gas and pressure of energy prices, I thinkits massively overdone as witnessed by these results," saidDrabble. "(In construction) we're seeing lots of projectscontinuing to start."
Ashtead's pretax profit rose 23 percent to 161 millionpounds ($246.5 million) for its first quarter ended July 31, atconstant exchange rates. Rental revenue rose 20 percent to 539.6million pounds, with oil and gas equipment accounting for just 3percent.
The company did not give specific full-year forecasts, butanalysts expect pretax profit to rise about 25 percent to 610million pounds, according to Thomson Reuters data.
"Despite concerns over comments from its main peer (UnitedRentals) and wider concerns on the U.S. macro outlook, this wasanother strong quarter of growth," said Investec analyst AndrewGibb in a note.
"The group continues to take market share, its end marketsare still in recovery mode and importantly, structural growth isstill prevalent."
Ashtead, which makes 85 percent of its revenue from U.S.division Sunbelt, said the region grew by 23 percent in thefirst quarter. Revenue at its British division A-Plant rose 11percent.
Shares in the company were up 6.1 percent at 1015 GMT.
($1 = 0.6532 pounds)
(Editing by David Holmes and Pravin Char)
