Rental equipment firm Ashtead delivers record performance
Rental equipment firm Ashtead delivers record performance after strong expansion in US specialty companies
- The company rents equipment such as excavators, cranes and scaffolding
- Ashtead’s UK arm offers traffic cone-like device for COVID-19 testing sites
- The boom in construction and the paucity of machinery for sale have fueled Ashtead.
Ashtead Group has lauded record annual results for exceptionally healthy growth in the US, particularly within its specialty businesses.
The London-based company, which rents out industrial supplies such as cranes, excavators and scaffolding, revealed that revenue rose nearly a fifth to $7.96 billion in the 12 months ending April.
Sales in its UK division rose 11 percent over the previous year to £403 million, thanks to a contract with the Department of Health to provide equipment such as traffic cones and portable generators to COVID-19 testing sites.
Record performance: Building equipment rental firm Ashted revealed that revenue rose nearly a fifth to $7.96 billion in the 12 months ending April.
Its Canadian branch also saw a strong performance as restrictions on television and film production were eased as a result of high demand for products in its lighting, grip and lens business.
But the biggest monetary increase in revenue came in its US division, where Ashted earns about 80 percent of its earnings and operates under the name Sunbelt Rentals.
Its general equipment branch in the country expanded widely through several acquisitions of firms primarily located in California, Florida and Midwestern states such as Pennsylvania and Ohio.
Another four purchases of US specialty businesses occurred, increasing rental revenue by more than a third and total income up 28 percent.
Earnings before tax increased 35 percent to £1.69 billion, with higher margins and operating cost savings across all three divisions.
Since the start of the pandemic, Ashtead has seen a surge in business in the UK and USA as construction booms and a lack of machinery available for sale has fueled demand for construction equipment rentals among customers.
US business: Revenue in Ashted Group’s US division, where it operates under the name Sunbelt Rentals and generates about 80 percent of its income, grew 28 percent higher.
Chief Executive Brendan Horgan said: ‘Our business has demonstrated its ability to perform in both the good times and the more challenging times over the past two years.’
He added: ‘We are well-positioned to navigate the challenges and capitalize on opportunities arising from market conditions, including supply chain constraints, inflation, labor shortages and economic uncertainty, all factors that we anticipate running. Change is believed to be the driver of structural change.
Shares of the Ashtead Group fell 4 percent to £36.51 on Tuesday, despite an optimistic assessment by Horgan, though their value has risen more than 59 percent over the past two years.
The FTSE 100 company has predicted a decline in domestic revenue this year as the UK government ended free mass COVID testing and subsequently closed testing sites from early April.
With Britain’s inflation rate at its highest level in four decades amid the current livelihood crisis, business also expects an increase in spending on labour, fuel and transport.
Laura Hoy, equity analyst at Hargreaves Lansdowne, said: “The combination of a positive outlook for the group’s end markets and a strong balance sheet means the company is positioned well.
‘And a competitive position in the fragmented equipment rental business provides scope for long-term growth.’
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