ii view: Ashtead details record revenues but cautious outlook

Full-year results to 30 April

• Total revenues down 1% to $10.8 billion
• Rental revenues up 4% to $9.98 billion
• Adjusted pre-tax profit down 5% to $2.12 billion.
• Adjusted profit (EBITDA) up 3% to $5 billion
• Capital expenditure of $2.4 billion, down from $4.3 billion year before
• Net debt down 3% to $10.33 billion
• Final dividend of $0.72 per share
• Total dividend for the year up 2.9% to $1.08 per share

Guidance:

• Expects year ahead (2026) rental revenue growth of 0-4%
• Expects year ahead capital expenditure of between $1.8 billion and $2.2 billion

Chief executive Brendan Horgan said:

"The Group delivered record full year rental revenue and adjusted EBITDA, with growth of 4% and 3% respectively.

"We are on track to move the Group's primary listing to the US in the first quarter of calendar year 2026, and I would like to thank shareholders for their engagement and approval at last week's EGM.

"The strength of our foundation and growth strategy is reflected in our results and guidance today.  I am excited for FY26 and what lies ahead as we continue to advance our great company."

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ii round-up:

Ashtead Group (LSE:AHT) today reported record annual rental revenues, but the equipment hire company flagged potentially slower growth for the year ahead, hindered by continued weakness in construction markets. 

Rental revenue for the year to late April rose 4% to a record $9.98 billion, but with adjusted pre-tax profit falling 5% to $2.12 billion. Management expects rental revenue for 2026 to rise by up to 4%, although a further forecast reduction in new equipment spend leaves the City estimating 2026 profit marginally below the current forecast of $2.25 billion. 

Shares in the FTSE 100 company fell 1% in UK trading having come into this latest news down by just over a tenth so far in 2025. That’s comfortably below a 7% gain for the FTSE 100 index itself year-to-date. Shares in UK rival Speedy Hire (LSE:SDY) are down by a similar amount over that time, while major US rival United Rentals Inc (NYSE:URI) has fallen 2%. 

Ashtead rents out a full range of construction, industrial, lighting and emergency power generating equipment via its Sunbelt brand in the US, Canada and UK. With North America comfortably generating most sales, Ashtead is moving its primary stock market listing to the US in early 2026. 

Ashtead pointed to finishes for construction projects across local non-residential markets as continuing to outpace those for new starting projects. However, mega project activity such as government infrastructure builds remained robust, with activity regarding new datacentre builds a feature. 

Reduced sales for used equipment left total annual group revenue down 1% at $10.8 billion. Capital expenditure for the year ahead, and focused on new equipment, is forecast by management to come in at up to $2.2 billion, down from $2.4 billion in 2025 and $4.3 billion in 2024. 

Group net debt fell 3% year-over-year to $10.33 billion. A final dividend of $0.72 per share, payable to eligible shareholders on 10 September, takes the total payment for the year up 2.9% to $1.08 per share. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results. 

ii view:

Started in Ashtead, Surrey in 1947, the group today rents out more than one million items of equipment to over 900,000 different customers. Its equipment to hire, broken down into General and Speciality items, includes aerial platforms, air compressors, heaters, lighting, water pumps and crowd control barriers. The US and Canada (North America), accounted for 92% of sales over this latest financial year, with the UK the balance of 8%. 

For investors, exposure to ongoing slow demand for local construction projects is not to be overlooked. Events outside of management’s control such as strikes and customer bankruptcies warrant consideration. A forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap, while elevated US government debt could at some point see expenditure on mega projects reduced. 

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To the upside, hoped-for cuts in US interest rates could help boost demand for local construction. Demand for mega projects and disaster recovery such as aiding with power cuts after hurricanes remains robust. Bolt-on acquisitions have helped grow rental revenue growth by 1% since May 2023, while the dividend payment has increased for more than 10 consecutive years, leaving the shares on a forecast dividend yield of around 1.8%. 

In all, while exposure to cyclical construction activity offers room for caution and the US listing may turn off some investors, Ashtead’s track record for long-term growth and a consensus analyst fair value estimate above £56 per share, are likely to be of interest to those with a long-term view. 

Positives: 

• Product and customer diversity 
• Progressive dividend payment 

Negatives:

• Tough economic backdrop
• High dependency on US business 

The average rating of stock market analysts:

Cautious buy