Ashtead, the equipment rental group, has witnessed a substantial increase in profits of nearly 30% due to a surge in US construction activity and the shift towards “onshoring” manufacturing by businesses.
The UK-listed company announced that pre-tax profits for the year ending in April grew by 30% to $2.2bn, accompanied by a 24% rise in revenue, at a constant currency, reaching $9.7bn.
The US market, trading under the name Sunbelt Rentals, contributes approximately 90% of Ashtead’s revenue, with rental revenue in the US rising to $5.9bn, marking a 23% increase.
Discussing the driving factors behind this substantial growth, CEO Brendan Horgan highlighted the incentives provided by Joe Biden’s Inflation Reduction Act, which aims to encourage clean technology investment. Furthermore, legislation focused on increased infrastructure spending and the local supply of semiconductors has prompted US manufacturers to invest in and upgrade their domestic facilities.
Ashtead has been successfully securing contracts associated with major US construction projects, including the establishment of new electric vehicle manufacturing plants, battery gigafactories, and the relocalization of supply chains for component parts. In the previous fiscal year, significant projects encompassed work on a terminal at JFK airport and a Chevron refinery.
Horgan affirmed the US as Ashtead’s fastest-growing market, describing it as the primary driver of future growth. Geopolitical tensions, environmental concerns, and the recognition of the need for proximity to the US have all contributed to this shift, with Horgan stating that “the US has made the determination that it will be de-globalizing.”
Highlighting the implications of this surge in US construction and the reversal of offshoring trends, Horgan stated, “The US surpassed $1tn of new construction starts” in 2022, characterizing it as “the very early days of a modern era US industrial revolution.”
Despite the company’s significant growth in the US market, Ashtead remains committed to its UK listing. Looking ahead, Ashtead anticipates revenue growth between 13% and 16% in the 2024 fiscal year, citing an increased number of mega projects and recent US legislative acts as factors enhancing its markets.
Goldman Sachs expressed optimism regarding the company’s outlook, particularly amidst concerns over the regional banking crisis in the US. It predicts strong double-digit revenue growth in the current fiscal year, despite the prevailing macroeconomic challenges.
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