Ashtead Group has achieved another record annual performance on the back of strong demand for its industrial equipment in the US.
The London-based business, which hires out machinery like scaffolders, excavators and forklift trucks, saw turnover jump by $1.7billion (£1.4billion), or 24 per cent at constant currency levels, to a record $9.7billion for the 12 months ending April.
Rental-only revenue in the US, where it trades as Sunbelt Rentals, climbed by 23 per cent, with organic sales providing the bulk of growth despite the firm completing dozens of acquisitions during the year.
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Consequently, Ashtead’s total US revenue increased by 27 per cent to $8.2billion, which more than offset a slump in its UK business caused by the end of Covid-19-related contracts with the Department of Health contracts.
The FTSE 100 company said in March it had benefited from a construction sector boom in the US.
On Tuesday it said its strength of its trading outlook is ‘enhanced by the increasing number of mega projects and recent US legislative acts’.
The Infrastructure Investment and Jobs Act has committed the US government to spend $1.2billion on building and repairing bridges and roads, rail projects and airport upgrades, among other measures.
In addition, Biden’s Inflation Reduction Act includes almost $400billion for green energy and technology, while the CHIPS and Science Act offers tens of billions in subsidies to build new semiconductor factories.
The volume of new work from these legislative acts helped boost Ashtead’s pre-tax profits by 30 per cent to a record $2.2billion and recommend an 85p per share final dividend, compared to 67.5p last year.
Chief executive Brendan Horgan expects the company’s future growth will continue to rely on the high level of public investment in major infrastructure projects.
He told investors: ‘We are in a position of strength, with the operational flexibility and financial capacity to capitalise on the opportunities arising from these strong markets and ongoing structural change.
Ashtead Group shares were 0.3 per cent down at £53.98 on Tuesday morning, although they have still grown by around 38 per cent in the past two years.
Adam Vettese, an analyst at trading platform eToro, warned: ‘In a way, Ashtead is at the mercy of the global economy, in that demand for industrial equipment tends to ebb in a downturn.
‘But that downturn may never arrive and, even if it does, Ashtead’s continued momentum might provide it with an element of resilience.’
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