Morning Note: Market News and Ashtead
Market News
US Markets were little changed on Wednesday with the S&P 500 closing 5980.87 -1.85 (-0.03%). Asian markets were weak with the Nikkei and Hang Seng shedding 1% and 2% respectively. In currency markets the pound steadied against the euro at 1.1692 after showing some weakness in recent sessions. US markets are closed today for Independence Day.
Iran: US officials are preparing for a possible strike on Iran as soon as this weekend, people familiar said. Donald Trump had earlier approved attack plans but withheld the final authorization, the WSJ reported. Foreign ministers from the UK, Germany and France plan to hold nuclear talks with Iran in Geneva tomorrow.
US Rates: Jerome Powell said he expects inflation to pick up in coming months and officials want to see the impact of tariffs before making judgments on policy. The Fed kept rates steady and pencilled in two cuts this year.
UK Rates: The BOE will probably hold its key rate at 4.25% and signal it’s sticking with a one-cut-every-other-meeting approach. The SNB will likely lower its policy rate by 25 bps to 0%.
Corporate: Morgan Stanley is said to be shutting its electronic market-making unit for US equity options, a space dominated by Citadel Securities and IMC Trading. TSB is attracting interest from Barclays and Santander, people familiar said. Microsoft is said to be planning to axe thousands of jobs, mostly in sales. Separately, the firm is prepared to walk away from alliance talks with OpenAI, the FT reported. Thames Water creditors are asking for waivers to exempt the water company from key environmental laws. LVMH is reeling from a sharp downturn in luxury demand, and questions about succession are growing louder.
Ashtead – Q4 Results
Ashtead Group released its unaudited fourth-quarter results on 17 June 2025, confirming a modest slowdown in rental activity but sustaining strong free cash flow and maintaining guidance for the coming year. The company flagged weaker demand in the North American non-residential construction sector, prompting a cautious tone that saw shares dip around 1–2% during the day.
Ashtead is a leading supplier of rental tools and equipment to the non-residential construction industry in the US & Canada (91% of revenue) and the UK (9%). The company represents a good play on the prospect of infrastructure spend by Western governments seeking to stimulate economic growth via fiscal means and the shift in the market from owning to renting equipment.
Significant investment is enabling Ashtead to take advantage of the substantial structural growth opportunities. The strategy is to generate growth through strong same-store growth supplemented by greenfield openings and bolt-on acquisitions. As a result, the group continues to broaden its product offering and leverage the benefits of scale. Although listed in the UK, Ashtead reports in US dollars.
Operating under its principal Sunbelt Rentals brand, Ashtead reported a slight 1% year-on-year decline in full-year revenue, down to $10.79 billion, driven primarily by a 46% fall in revenue from used equipment sales. However, core rental revenue remained resilient, growing 4% to $9.98 billion. Adjusted EBITDA rose 3% to $5.02 billion, while adjusted pre-tax profit reached $2.13 billion, marginally beating analyst forecasts.
In Q4 alone, rental revenue was flat, with the general tool segment showing only a 1% increase and specialty equipment up 4%. Reported net rental revenue for the quarter was $2.33 billion, despite the impact of macroeconomic weakness. Adjusted EBITDA margin improved to 45.4%, supported by disciplined cost management; operating profit for the quarter stood at $523 million, and adjusted earnings per share came in at $3.70.
Ashtead’s annual free cash flow reached a near-record $1.8 billion, enabling $2.4 billion of investment primarily into rental fleet and working capital, plus $886 million returned to shareholders via dividends and share buybacks. Net debt to EBITDA remained at 1.6×, comfortably within its 1.0–2.0 × target range, even after the highest-ever capital investment of $2.7 billion.
Looking ahead to FY 2026 (ending April 2026), Ashtead projected rental revenue growth of between flat and 4%, citing continued weakness in U.S. commercial construction offset by robust demand from "mega projects" in data centres, semiconductors, and LNG. It also announced gross capital expenditure guidance of $1.8–$2.2 billion and expected free cash flow of $2.0–$2.3 billion. Shareholder approval was secured on 10 June for its primary listing shift from London to New York, with a targeted move in early calendar 2026.
In summary, Ashtead posted a robust fourth quarter, marked by steady underlying rental performance, disciplined operating margins, and exceptional free cash flow, despite external headwinds and softer equipment sales. The cautious guidance for flat to modest growth in the year ahead reflects uncertainty in the U.S. non-residential segment, though long-cycle infrastructure projects offer resilience. The forthcoming launch of Sunbelt 4.0 and the listing shift signal ambition to build scale and enhance investor access in its dominant U.S. market.
