Ashtead Group PLC updates
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Ashtead, the British group best known for supplying diggers, generators and lighting to construction sites, is plotting a breakthrough in the Hollywood film business.
Brendan Horgan, chief executive of the FTSE 100 group, is planning to expand its Canadian film equipment rental arm to Los Angeles and the US, the world’s biggest entertainment market, and the UK.
Ashtead, which trades under the name Sunbelt Rentals and is valued at £27bn, has the biggest equipment rental business in Britain and the second largest in the US.
It wants to expand its film equipment rental arm, William F White International, based in Canada, to take advantage of the pandemic success of streaming platforms such as Netflix, which have become big money spinners for film production groups.
Ashtead bought William F White, which rents out special cameras, array rigs and lighting equipment to film and television production companies, for £136m in 2019 as it sought to diversify away from construction.
After a setback during the first wave of the pandemic, a surge of investment in new shows by streaming services helped William F White’s annual revenues grow.
The company, which is Canada’s biggest national film and television equipment rental business, is on track to hit C$200m in revenues this year, up from C$120m (US$94m) at the time of the takeover.
“Netflix to Disney to CBS — they are shooting to fill the ravenous appetite out there for content. We have zero of that business in the UK or the US,” Horgan said. “We plan to expand into the US and UK.”
The UK film industry has boomed in recent years, partly thanks to tax breaks, with spending by production companies on high-end television rising from £1.8bn in 2018-19 to £3.5bn in 2020-21, according to the British Film Institute.
Amazon Studios announced last month it is moving production of its Lord Of The Rings series from New Zealand to the UK, while the second season of fantasy drama Good Omens will be filmed exclusively in Scotland after a gruelling international filming tour for the first one.
That also reflects a boom in global spending on content, which is expected to record another year of double-digit growth and hit $250bn in 2021, figures from Purely Streamonomics show.
Horgan estimates that if the division captures “a sliver of the US market”, it would generate revenues exceeding $250m. He added that the cross-selling opportunities for equipment under its other businesses such as generators and industrial lighting would be significant.
The comments came as Ashtead raised its full-year revenue forecast this week after construction activity bounced back strongly and live events made a stuttered return from Covid-19 shutdowns. It expects growth of 13-16 per cent over the previous year’s revenues of £5bn, up from previous estimates of a 6-9 per cent increase.
Supply chain pressures for equipment makers such as Caterpillar and JCB are also benefiting Ashtead because users turn to rentals when suppliers, dealers and distributors run out of stock and the tight supply pushes up rates for its equipment, Horgan added.
Ashtead also supplies equipment to Covid-19 testing centres and to areas hit by natural disasters, such as Hurricane Ida, where it provides lighting, generators and pumps for the clean-up following the storms or catastrophe.