(Reuters) - Britain's Ashtead Group Plc forecast full-year revenue ahead of its expectations on Tuesday, encouraged by strong demand for rental equipment across its markets, as clients cut back on buying to lower capital expenditure.
Companies tend to cut back spending on equipment and rent them out instead during difficult periods to lower their capital expenditure and protect their finances, benefiting equipment rental companies such as Ashtead.
Shares of the London-listed company, which rents out industrial and construction equipment, rose 4% after results and as it raised its interim dividend by 20%.
Ashtead posted a 28% jump in adjusted pre-tax profit to $688 million in the three months ended Oct. 31.
The company said it now expects rental revenue to grow by 18% to 21%, from a previous forecast of 15% to 17% growth, mainly driven by its largest market the United States - where it trades under the name Sunbelt.
It also flagged inflationary pressures relating to labour, transportation and fuel, but Chief Executive Brendan Horgan said it has the "operational flexibility to capitalise on the opportunities arising from the market and economic environment."
(Reporting by Amna Karimi and Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich and Nivedita Bhattacharjee)