Proactive Investors - FTSE 100-listed Ashtead Group PLC (LON:AHT) and former blue chip Ferguson PLC both provide updates that will provide insight into the health of US construction markets as both groups have a major stateside focus.
Ashtead, the construction equipment hire group, in September it reported stronger first-quarter sales and profits than expected as the US construction sector remained strong, but said this performance was being offset by increasing interest costs.
This meant it kept full-year profit targets unchanged even though rental revenue guidance was raised for the US, Canada and the UK.
Analysts at Hargreaves Lansdown (LON:HRGV) said: “Medium-term trends look promising, as the US looks to build out its domestic supply chains there should be an abundance of projects that drive up demand for Ashtead’s equipment.
“The last decade’s seen the larger players consolidate and grow, and Ashtead’s not sitting idly to admire the results. New bolt-on acquisitions are a key part of the growth strategy, with $337m spent on acquisitions last quarter. The acquisitions have tended to be lower margin businesses though, so the benefits from increased scale were somewhat offset in margin decline."
Margins will be watched closely, especially considering the host of cost pressures around.
Plumbing supplies group Ferguson back in September increased its final dividend 15% and extended its share buyback even though growth slowed in the fourth quarter and it expected a further deceleration.
The £24bn group, which was ejected from the FTSE 100 earlier this year as it switched to a primary listing in New York, is due to report on trading for its first-quarter to end-October.
Analysts at UBS expecting organic sales growth of 15% "with volumes slightly down and pricing still inflationary" with acquisitions taking total sales to 19%, down from 21.4% in the fourth quarter of the previous financial year, 23.1% in the third quarter and 29.1% in the first half.
Adjusted earnings (EBITA) are seen increasing 2% to US$781mln.
"We don’t expect a material change to FY23 guidance which was issued in September," they added, with Ferguson predicting “low single digits” of net sales growth, with adjusted operating margin of 9.3% to 9.9%.