Ashtead Group launches new $500m share buyback scheme

Ashtead Group launches fresh $500m share buyback scheme after the equipment rental group paid investors £1bn over two years

  • The equipment rental company said it would buy another $500m of its shares 
  • BP and HSBC revealed buybacks of $1.75bn and $2bn, respectively, on Tuesday
  • British blue-chip firms launched a record £55.8bn of share repurchases in 2022 

Ashtead Group has begun a new share buyback programme less than a week after concluding its previous scheme.

The London-listed building equipment rental company said Tuesday it would snap up another $500million of its shares between now and April 2024, having just finished a two-year project to acquire up to £1billion in shares last Friday.

It told shareholders that purchases would begin at a ‘relatively low level,’ with the amount bought at specific times dependent on factors like business investment, net debt and the economic backdrop.

Buyback: Building equipment rental company Ashtead Group said it would buy another $500million of its shares between now and April 2024

BP and HSBC also revealed buybacks of $1.75billion and $2billion, respectively, on Tuesday, taking the number of FTSE 100 firms who have conducted or declared such schemes to 27 so far this year.

British blue-chip groups launched a record £55.8billion of share repurchases in 2022 – with approximately 40 per cent made by the oil and gas industry – as the global economy recovered from Covid-19 restrictions.

This was despite economic uncertainty gradually worsening throughout the year as oil and gas prices soared following Russia’s  invasion of Ukraine, which exacerbated inflation and central banks to hike interest rates multiple times. 

‘Whether the final total for 2023’s buybacks will match or exceed that of last year remains open to question, and much may depend on the trajectory of the global economy in the second half, but we are certainly off to a fast start,’ said Russ Mould, investment director at AJ Bell.

Known for leasing machinery such as forklifts, cranes and scaffoldings, Ashtead’s sales have ballooned over the past couple of years due to acquisitions and a rebound in construction activity.

Two months ago, the firm raised its annual earnings outlook following a solid third-quarter performance, when its turnover climbed by 22 per cent and pre-tax profits jumped by a third.

On a nine-month basis, the company’s rental revenue grew by a quarter thanks to continued bumper trade in the US, where it operates under the name Sunbelt Rentals and derives about 90 per cent of its profits.

Chief executive Brendan Horgan said: ‘Our business is performing well with clear momentum in strong end markets, which are enhanced by the increasing number of mega projects and recent US legislative acts.’

Last August, US President Joe Biden signed the Inflation Reduction Act and CHIPS and Science Act, which collectively includes around $650billion of public funding and incentives for various projects.

Horgan added: ‘We are in a position of strength, with operational flexibility to capitalise on the opportunities arising from these strong markets and the ongoing drivers of structural change, including supply chain constraints, inflation and labour scarcity. ‘

Ashtead Group shares were 2.5 per cent up at £46.93 on early Tuesday afternoon and have grown by approximately 118 per cent over the past three years.