Ashtead Group boasts a record full-year result amid strong US demand

Ashtead Group posted another record annual performance as a result of strong demand for its industrial equipment in the US.

The London-based company, which hires out equipment such as scaffolding, excavators and forklift trucks, saw sales rise by $1.7 billion (£1.4 billion), or 24 percent at constant exchange rates, to a record $9.7 billion for the 12 months ended April .

U.S. rental-only revenues, where it trades as Sunbelt Rentals, were up 23 percent, with organic sales accounting for most of the growth, despite the company making dozens of acquisitions during the year .

As a result, Ashtead’s total sales in the US rose 27 percent to $8.2 billion, more than offsetting the slump in UK business due to the end of contracts related to Covid-19 with the Department of Health.

The FTSE 100 company said in March it had benefited from a boom in the US construction industry.

On Tuesday it said the strength of its trade outlook “reinforced by the increasing number of mega projects and recent US legislative acts’.

The Infrastructure Investment and Jobs Act has required the US government to spend $1.2 billion on bridge and road construction and repair, rail projects and airport upgrades, among other things.

In addition, Biden’s Inflation Reduction Act includes nearly $400 billion for green energy and technology, while the CHIPS and Science Act provides tens of billions in grants to build new semiconductor factories.

The volume of new work from these legislative acts helped boost Ashtead’s pre-tax earnings by 30 percent to a record $2.2 billion and recommended a final dividend of 85 pence per share, compared to 67.5 pence last year.

Chief executive Brendan Horgan expects the company’s future growth to continue to depend on the high level of public investment in major infrastructure projects.

He told investors: “We are in a strong position, with the operational flexibility and financial capacity to capitalize on the opportunities arising from these strong markets and ongoing structural changes.

Ashtead Group Shares were down 0.3 per cent on Tuesday morning to £53.98, although they have still grown by around 38 per cent over the past two years.

Adam Vettese, an analyst at trading platform eToro, warned: “Ashtead is, in a way, at the mercy of the global economy in that demand for industrial equipment tends to ebb in a recession.

“But that recession may never come and even if it does, Ashtead’s continued momentum could give it an element of resilience.”