The firm posted a 2% fall in underlying pre-tax profits to $2.23 billion (£1.76 billion) for the year
Ashtead, the equipment hire company, has reported a drop in annual profits and warned of a slowdown in rental sales in the coming year, amid rumours that it may consider moving its listing to the US.
The FTSE 100 company revealed a 2% decrease in underlying pre-tax profits to $2.23 billion (£1.76billion) for the year ending April 30. Ashtead, which provides rental equipment to sectors including construction, emergency response and entertainment across the US, UK and Canada, saw its underlying pre-tax profits plunge by 10% to 417 million US dollars (£328.6million) in the last quarter of its financial year.
The company attributed the full-year profit decline to increased interest rate costs on a growing debt pile, although the operating result was more resilient, rising by 5% over the year to $2.65 billion (£2.09billion), despite a 2% fall in the fourth quarter. However, the results also indicated a significant slowdown in rental revenue growth, down to 10% group-wide from 22% in 2022-23, with a further steep decline to between 5% and 8% predicted for the coming year.
Shares dropped by 5% in early trading on Tuesday. This comes amid increasing speculation that the company is contemplating a move from the London to New York stock market. It has been reported that Ashtead’s board is currently reviewing a potential listing switch, although these plans are said to be in their early stages.
Earlier this month, the company addressed rumours by stating it “reviews its capital structure regularly, including its domicile, recognising the fact that 90% of its business is in the US”. Matt Britzman, equity analyst at Hargreaves Lansdown, commented: “Hot off the heels of news that it may be looking to move its main listing to the US, this was a slightly soft set of results.”
“Whether you look at revenue, profit, or guidance, it’s hard to see much for markets to get excited about here. Management would be forgiven for giving slightly conservative guidance for the coming year after several disappointments of late, and it looks like that’s the case.”
Ashtead revealed that last year’s Hollywood actors and writers’ strike dealt a significant blow to the company. The firm noted that the strike had a “significant impact” on its Canadian film and television operations, and also affected parts of its US and UK businesses as demand for rental equipment dropped when productions stopped.
The group reported that following the resolution of the industrial action in early December, activity in the film and TV sector “recovered progressively through the fourth quarter”.
In the US, Ashtead’s biggest market where it operates under the name Sunbelt Rentals, saw a 12% increase in rental revenues, although this was only half of the 24% growth experienced the previous year. Meanwhile, in the UK, rental revenue rose by 6%, which was twice the 3% growth recorded the prior year.
