The strong momentum in US construction markets continues to play into the hands of two of the UK’s most successful overseas operators, equipment rental firm Ashtead (AHT) and plumbing supplies company Ferguson (FERG).


In its half-year results, Ashtead said demand for its products and services was not only above the same period last year but well above the same period in 2019, leading it to raise its full year outlook and lifting its shares 2.5% to £63.50.

Total rental revenues for the six months to October were up 20% to $3.5 billion driven by strong volume growth in the US, especially in specialty equipment, as well as a sharp recovery in Canada where Covid restrictions had a bigger impact on last year’s revenues.

Group pre-tax profits were $890 million, up nearly 38% on the previous year’s first half, while return on investment was 23% in both the US and Canada against 18% in the US and just 7% in Canada during the first half of 2020.

Thanks to the strength of the US, Ashtead raised its forecast for group full year rental income growth from 13% to 16% to between 17% and 20%, which would allow it to invest between $2.2 billion and $2.4 billion in new equipment and bolt-on acquisitions to maintain growth.


Meanwhile, plumbers’ merchant Ferguson, which also focuses on the US and Canada and reports its earnings in dollars, posted a 27% increase in revenues for the first quarter to October to $6.8 billion and a 64% increase in operating profits to $739 million.

The firm cited ‘supportive end markets and continued market share gains’ for its substantial revenue increase, while the ability to manage price inflation along with good cost control were cited for its ‘particularly strong’ profit growth.

Chief executive Ken Murphy said he was ‘pleased with earnings growth that significantly outpaced revenue growth to generate strong operating leverage, demonstrating the agility of our business model’.

Moreover, while he expects growth to taper off in the second half along with rising prices as inflation moderates, Murphy said given the strong momentum in the business and the agility of its model, the firm’s full year expectations had increased. Shares jumped 4.5% on the news to £120.80.


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Issue Date: 07 Dec 2021