(Reuters) - Ashtead Group (>> Ashtead Group) expects the clean-up and rebuilding needed in the United States after hurricanes Harvey and Irma to generate more demand for its diggers and tools.
"As a minimum, we expect that the impact will help to underpin the current market assumptions in our 2021 plan," the British company's chief executive Geoff Drabble said on Tuesday.
Shares in Ashtead, which hires out tools on short-term contracts, were up 8.3 percent to 1824 pence at 0911 GMT, making it London's top blue-chip gainer after it said underlying pre-tax profit rose 21 percent to 238 million pounds in the first quarter, 4 percent higher than consensus estimates.
"There will now be a significant clean-up programme, where our scale, breadth of fleet and experiences in similar events will be a major asset," Drabble said on an analyst call, adding that Ashtead has a 10 percent fleet market share in Houston.
Ashstead's underlying rental revenue rose 17 percent to 828.8 million pounds, while sales at its U.S. division Sunbelt Rentals, which accounts for 87 percent of revenue, rose 15 percent to $983 million pounds.
"Whilst management is clearly taking a cautious view on forward forecasts and the potential impact of the hurricane season, it is clear that momentum is strong in the business and that risks to earnings remain firmly on the upside," RBC analysts, who rate Ashtead as "outperform", said.
United Rentals Inc (>> United Rentals, Inc.), which has more exposure to the oil and gas sector, reported better than expected results for the quarter to June 30 as underlying rates improved.
Ashtead shares have gained more than 35 percent since the U.S. elections on expectations that President Donald Trump will deliver on his plans to spend $1 trillion on roads and bridges, although this has yet to be put into action.
"A combination of weak sterling and Donald Trump's promises of a domestic infrastructure spending spree have raised confidence levels for management and investors alike," George Salmon, equity analyst at Hargreaves Lansdown, said.
At the same time, recent data showed that U.S. construction spending unexpectedly fell in July, hitting a nine-month low amid a steep decline in investment.
(Reporting by Noor Zainab Hussain and Esha Vaish in Bengaluru; editing by Louise Heavens/Alexander Smith)
By Noor Zainab Hussain and Esha Vaish