INDUSTRY INSIDER | April 23, 2024

Shares of Sunbelt’s Parent Ashtead Group Slump as FTSE 100 Firm Trims Revenue Outlook

Original Source: MSN

Ashtead Group shares were the FTSE 100’s biggest faller on Tuesday morning after the firm warned revenue growth would be towards the lower end of guidance.

The equipment rental company, which leases machinery like battery-powered saws and forklift trucks, saw its shares slump 7 per cent in early trading before recovering to be 4.1 per cent down at £54.92 just after midday.

Its performance in North America has been hurt by subdued levels of natural disaster emergency response activity, as well as industrial action across the US film and television sector.

Although the Hollywood labour disputes concluded in December, Ashtead noted activity had resumed more ‘slowly than expected’ in Canada since the new year began.

Consequently, the UK-based business expects turnover expansion will probably be at the bottom end of its 11 to 13 per cent range this financial year.

But Ashtead said annual results will be ‘broadly’ commensurate with forecasts, supported by bolt-on acquisitions and growing rental sales.

In North America, where it trades under the name Sunbelt Rentals, the company saw revenue jump by 15 per cent to $7.1billion in the nine months ending January.

Trading has also been helped by an increase in large construction projects and laws, such as Joe Biden’s Inflation Reduction Act, committing the US federal government to spend hundreds of billions improving infrastructure.

‘We are in a position of strength, with the operational flexibility and financial capacity to capitalise on the opportunities arising from these market conditions and ongoing structural changes,’ said Brendan Horgan, chief executive of Ashtead.

However, the firm’s UK sales flatlined at £523.7million over the nine-month period, partly due to the end of Covid-related contracts with the Department of Health.