However, turnover was flat at £13.1m (2010: £13.1m).
The value of its total assets (less liabilities) increased to £22.3m (2010: £18.9m).
HE Group comprises two subsidiaries: HE Services, which hires plant and machinery; and Masterhitch Europe, which manufactures and sells quick hitches and buckets. The Kent-based firm has 12 depots around the UK.
During the previous two accounting periods, the firm reduced the size of its hire fleet, but planned expansion over the past year has been delayed by a shortage of supplies from Japan due to the earthquake.
HE Group's increased margin is down to improved utilisation of a smaller fleet plus an increase in hire rates due to a shortage of machines in the industry.
The firm also increased profit on sale of second-hand equipment to £1.6m (2010: £945,000) due to strong demand from the Eurozone.
In a statement, HE Group said: “The directors consider the liquidity of the business is much stronger than indicated by its balance sheet due to its revolving nature and ongoing ability to raise funds from the sale of second hand plant. We expect to continue managing the size of the company's fleet to meet changing market conditions and the requirements of its customer base.
“The outlook in construction remains uncertain, but we are hopeful the demand for hired plant will increase as works on delayed projects filter through. The board remains confident that, with the resources at its disposal, including the ability to sell plant when appropriate, the company can continue to trade through the current economic difficulties.”