Ashtead performs with confidence
5 December 2023
Despite its recent trading update highlighting factors that could impact its business, Sunbelt Rentals’ parent Ashtead Group has released unaudited results for the half year and second quarter ended 31 October 2023 showing a record first half performance, with overall group revenue up 16%; US revenue up 18% and rental revenue up by 14%.
In the US, rental only revenue of $3,380m (2022: $2,952m) was 15% higher than the prior year, reflecting the continued growth of Sunbelt’s Specialty businesses
The UK business generated rental only revenue of £239m, up 11% on the prior year (2022: £215m). Excluding the impact of the work for the Department of Health, which ended during the first quarter of last year, rental only revenue increased 12%. Acquisitions since 1 May 2022 contributed 4% of this growth.
Ashtead says that rental only revenue growth in the UK has been driven by both rate and volume improvement. Rental revenue increased 3% to £301m (2022: £293m), while total revenue decreased 1% to £359m (2022: £361m), reflecting the high level of ancillary and sales revenue associated with the work for the Department of Health last year in Covid-19 related activities.
The group states that, while it continues to improve rental rates in the UK, the increase has been insufficient to offset the inflation impact on its cost base. These factors, together with the loss of revenue from the work for the Department of Health, contributed to the UK generating an EBITDA margin of 28.5% (2022: 30.4%) in the half year and a segment profit of £33m (2022: £48m) at a margin of 9.1% (2022: 13.2%).
Looking at the second quarter only, the UK generated rental only revenue in the quarter of £119m (2022: £111m), 8% higher than the prior year. Total revenue increased by 1% to £181m (2022: £180m) reflecting the high level of ancillary and sales revenue associated with the services provided last year for the Queen's funeral, says the group.
Ashtead's Chief Executive, Brendan Horgan, commented: “On 20 November we issued a trading update lowering our revenue growth and earnings guidance for the full year to reflect the lower level of emergency response activity related to natural disasters in North America in late Q2 and into Q3 and the longer than anticipated actors' and writers' strikes, impacting both the Film & TV business and adjacencies within our Canadian, US and UK businesses.
“Notwithstanding these factors, our end markets in North America remain robust with healthy demand, supported in the US by the increasing number of mega projects [those worth at least $400m] and recent legislative acts.
“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 change. As we prepare our next strategic plan, Sunbelt 4.0, the Board looks to the future with confidence."
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