Ashtead profits jump 30% as US manufacturing moves ‘onshore’

Ashtead, the equipment rental group, said a surge in US construction activity amid the move by businesses to “onshore” manufacturing boosted profits by almost a third.

The UK-listed company said pre-tax profits for the year to April rose 30 per cent to $2.2bn on a 24 per cent rise in revenue at constant currency to $9.7bn.

The US, where it trades under the name Sunbelt Rentals, accounts for about 90 per cent of Ashtead’s revenue. Rental revenue in the US rose 23 per cent to $5.9bn.

Underpinned by Joe Biden’s Inflation Reduction Act, intended to stimulate clean technology investment, as well as legislation that aims to increase spending on infrastructure and the domestic supply of semiconductors, US manufacturers were investing in and modernising domestic facilities, said chief executive Brendan Horgan.

The company has won business tied to large US construction projects including new electric vehicle manufacturing plants, battery gigafactories and the localising of the supply chains for component parts.

Large construction projects in the last business year included work on an airport terminal at JFK and a refinery for Chevron.

“The US is our fastest growing [market] and it will . . . continue to be the primary engine of growth,” said chief executive Brendan Horgan.

Geopolitical tensions, environmental issues and the realisation that supply chains needed to be closer to the US also drove the shift, said Horgan, noting that “the US has made the determination that it will be de-globalising”. 

This surge in US construction or “onshoring” followed “many decades of sending manufacturing and production abroad, and here you see that reversing,” said Horgan. “The US surpassed $1tn of new construction starts” in 2022, he added, describing it as “the very early days of a modern era US industrial revolution”.

Despite continued growth in the US, with the bulk of its revenues coming from across the Atlantic, Horgan confirmed the company’s commitment to its UK listing. 

Ashtead said it anticipated revenue growth of between 13 and 16 per cent in the 2024 fiscal year, noting its markets were “enhanced by the increasing number of mega projects and recent US legislative acts”.

Goldman Sachs said it expected the outlook “to be taken well given the concerns around the regional banking crisis in the US”. It forecast “strong double-digit revenue growth this fiscal year despite the weakening macro outlook”.