Aggreko’s (AGK) profit warning this morning marks a grim month for equipment hire companies. Arriving as it does on the back of similar sell-offs at sector peers Ashtead (AHT), Speedy Hire (SDY) (click here) and HSS Hire (HSS:AIM) (click here), all does not appear to be well in the industrial sectors of the developed world.

Spending cuts among North American clients in the oil and gas industry is a big part of the reason Aggreko now expects profit-before-tax to fall below prior expectations of £292 million, according to broker consensus forecasts provided by Morningstar. Instability in Yemen is also impacting profits, an outcome which sees shares in the stock trading 14.9% lower this morning at £12.17.

Comparisons between Aggreko and its London-listed peers are admittedly not perfect. A global market leader in temporary and semi-permanent power equipment hire, Aggreko boosts a unique business with different drivers to most other sector constituents

Speedy and HSS are focused on smaller tools and light equipment and are exclusively UK focused. Shares in HSS are up today, indicating the read-across is far from straightforward.

Investors are taking more of a cautious view on Ashtead, however, the number two in the US heavy equipment hire market. North American weakness is at the centre of Aggreko’s warning and markets have passed their verdict: shares in Ashtead are down 2.2% at 953p. That follows a larger slump yesterday as earnings forecasts were downgraded on disappointing second quarter numbers released by US rival United Rentals (URI:NYSE).

The idea that Ashtead could be about to be drawn into a stalling US industrial market will be tested more fully when it reports first quarter numbers on 2 September. Some analysts we’ve spoken to are optimistic. One investment bank is telling clients to buy Ashtead around the United Rentals update, based on the idea it will beat first quarter and subsequent profit forecasts because of the maturing of new rental sites opened in recent years. Other say rental rates have peaked and growth from here on in will be harder to come by.

Issue Date: 24 Jul 2015