By Aby Jose Koilparambil and Yadarisa Shabong
(Reuters) - Ashtead (LON:AHT) is proposing to move its primary listing to New York from London, the equipment rental company said on Tuesday, as it also cut its revenue and profit expectations on persistent weakness in the U.S. construction market.
The profit outlook downgrade sent Ashtead's shares down as much as 14.3%, while its plans to move its listing to New York will be another blow for the London stock exchange. It would join a growing list of companies moving away from European listings in favour of U.S. markets, where valuations could be higher.
Ashtead, the second largest U.S. equipment rental company, said revenue for the year ending April is now expected to grow in the range of 3% to 5%, down from its earlier expectation of 5% to 8% growth.
As a consequence, profit for the year ending April 2025, will be lower than previous expectations, it said, without giving further details.
Equipment rental firms like Ashtead have faced profit margin pressures as a slow recovery in U.S. commercial construction, high interest rates, and ongoing supply chain issues, offset strength in mega projects and hurricane response activity.
Donald Trump's U.S. election victory has raised expectations for increased construction activity driven by his America first rhetoric, but the impact won't be immediate.
"We think it would be just too fast to expect the local construction market to rebound in the second half of our fiscal year," CEO Brendan Horgan told analysts.
Ashtead shares tumbled nearly 13% to 5,468 pence by 1500 GMT.
"The downgrade is disappointing with investors believing we were through the worst of the downgrades," J.P.Morgan said in a note.
'MOVING WEST'
Ashtead, which makes most of its profits in the U.S., said it would discuss the listing plan with shareholders in the coming weeks and expects the primary listing move to be implemented in the next 12-18 months.
"The centre of gravity of the group has been moving west over a long period of time, and today, we are, to all intents and purposes, a U.S. company," Horgan said in the analyst call.
Analysts were largely unsurprised by Ashtead's plan to move to a U.S. listing.
"It is obviously going to be a blow (for London), and it is almost as if it is a ripple effect where one company sees what has occurred for another and the benefits that they have had on valuation," said Morningstar analyst Matthew Donen.
Ashtead said it would retain a UK listing in the international companies segment.
Established in England in 1947, Ashtead, listed in London since 1986, expanded into the U.S. by acquiring Sunbelt Rentals in 1990. It became a major U.S. equipment rental firm after several deals in the early 2000s.
As of Monday, Ashtead's market value was nearly $35 billion, compared to United Rentals (NYSE:URI)', the leading U.S. player, at about $54.85 billion.
Half-year pre-tax profit fell 4% to $1.26 billion, slightly below a company-compiled analysts' consensus estimate of $1.29 billion.
Ashtead also announced a $1.5 billion stock buyback.