Ashtead Group, a rental equipment business, saw its shares drop by 3.9% on Tuesday after releasing weaker-than-expected results for the last financial year. The company reported revenue growth of 12% to $10.9 billion, driven by a 10% increase in rental revenues to $9.6 billion. However, sales growth slowed to 7% in the final quarter, with rental revenues rising by 9% to $2.3 billion.
In the US, total revenues increased by 13% to $9.3 billion, with rental revenues improving by 12%. Ashtead attributed these results to market outperformance and the benefits of its strategy to grow Specialty businesses and broaden end markets. Rental sales grew by 8% organically, with bolt-on acquisitions contributing 4% to the growth.
Despite the overall growth, the company faced challenges in Canada due to strike actions by the Writers Guild of America and Screen Actors Guild, impacting the Specialty Film & TV business and some other Canadian operations. Industrial action in the US and UK also had an impact on the business. In the UK, revenues increased by 8% to $888 million.
Operating profit rose by 5% over the year to $2.6 billion, but dipped by 2% in the final quarter to $561 million. The increase in profits was attributed to higher interest payments on debt and greater capital expenditure. Ashtead invested $4.3 billion across its business last year, with $905 million spent on 26 bolt-on acquisitions. The company also added 113 locations in North America.
Ashtead’s debt increased to $10.7 billion from $9 billion, and it raised its full-year dividend to 105 US cents per share. CEO Brendan Horgan commented that the company’s operating performance remains strong, with record revenues and operating profit. He emphasized the investments made to take advantage of growth opportunities while maintaining a strong balance sheet.
Looking ahead to financial year 2025, Ashtead expects rental revenue growth at the group level to slow to between 5% and 8%. Analysts have praised Ashtead’s performance, with Andy Murphy of Edison Group calling it a solid performance which underscores the company’s strong foothold and strategic expansion in North America. Matt Britzman of Hargreaves Lansdown noted that while the results were slightly soft, Ashtead is still demonstrating strength in the market.
Overall, despite facing challenges in various markets, Ashtead Group continues to perform well and make strategic investments to drive growth. The company’s focus on expanding its Specialty businesses and broadening its end markets has contributed to its overall success in the rental equipment industry. Ashtead remains confident in its financial health and future prospects, as it navigates through market fluctuations and industrial actions to deliver value to shareholders.
