Strong Sunbelt results
7 March 2023
Sunbelt Rentals’ parent Ashtead Group reports another strong performance in its Q3 results announced this morning, with overall revenue growth of 25 per cent across all its territories, particularly in the US which typically accounts for around 80 per cent of group revenue.
Group revenue increased 23 per cent (25 per cent at constant currency) to $7,224m or £5,996m in the nine months (2022: $5,884m or £4,884m). This resulted in adjusted profit before tax increasing 26 per cent to $1,778m or £1,475m (2022: $1,406m or £1,167m). Ashtead uses the US dollar instead of sterling to present its group results for clarity.
The UK business generated rental only revenue of £321m, up 7 per cent on the prior year (2022: £301m). Following the ending of free mass Covid testing in April 2022, revenue from the Department of Health ended during the first quarter, and in the nine months was significantly lower than last year. Indeed, Ashtead regards this year as one of transition as it redeploys assets elsewhere.
Excluding the impact of the work for the Department of Health, rental only revenue increased 22 per cent. Rental revenue increased 4 per cent to £424m (2022: £406m). Total revenue decreased 5 per cent to £522m (2022: £547m) reflecting the high level of sales revenue associated with the work for the Covid test centres, which accounted for approximately 6 per cent of revenue in the nine months, compared with around 32 per cent a year ago.
The UK business was also impacted by a charge of £4m in the third quarter to impair a convertible loan note due from the Britishvolt vehicle battery business startup, in which Ashtead had invested, and which entered administration in January. As a result, the UK generated an EBITDA margin of 28.7% (2022: 30.1%) and a segment profit of £55m (2022: £72m) at a margin of 10.6% (2022: 13.1%).
In the third quarter specifically, the UK generated rental only revenue of £106m (2022: £98m), 8 per cent higher than the prior year. Total revenue decreased 10 per cent to £160m (2022: £179m).
Ashtead's chief executive, Brendan Horgan, commented: “Our business is performing well with clear momentum in strong end markets, which are enhanced by the increasing number of mega projects and recent US legislative acts.
“We are in a position of strength, with operational flexibility to capitalise on the opportunities arising from these strong markets and the ongoing drivers of structural change, including supply chain constraints, inflation and labour scarcity. We now expect full year results ahead of our previous expectations and the Board looks to the future with confidence."
● Regarding environmental responsibilities, Ashtead has made a long-term commitment to reduce its Scope 1 and 2 carbon intensity by 35 per cent by 2030 from its level in 2018, with a near-term commitment to make a reduction of 15 per cent by 2024.
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