With political upheaval now the rule — not the exception — in the US and the UK, Twitter wags have been disputing which country is the more damaged:
@chriscareyWTPC — 24 Jun 2016
Any other country worrying whether they’re the stupidest country in the world this morning? Take the day off. We’ve got this . . . #EURef
@bpedaci — 9 Nov 2016
Britain: Brexit is the stupidest, most self-destructive act a country could undertake.
USA: Hold my beer!
@rbrtrmstrng — 9 Jun 2017
US still biggest clown country in developed world, but kind of the UK to make a race of it.
But one non-Tweeter with experience of both countries has found both are exceptionally strong markets.
Geoff Drabble, chief executive of equipment hire group Ashtead, admits to certain technological limitations: as well as avoiding social media, he claims not to know “one end of a digger from another”.
However, he does know how to achieve double-digit sales growth — in the US and the UK — from renting them out. Yesterday, his US Sunbelt and UK A-Plant businesses reported 14 and 15 per cent growth, respectively.
Mr Drabble has achieved this by encouraging Americans to copy the British — in more of a Norman Foster than Nigel Farage kind of way.
Ashtead has achieved record utilisation of its construction equipment by convincing US builders that it makes more sense to rent than buy. In the UK, 80 per cent of plant and equipment is rented.
In the US, Ashtead has raised the proportion from 40 to 55 per cent in the past 10 years — but now thinks it can lift this to 70 per cent.
Even the American Rental Association agrees. It has increased its forecast of annual rental growth to 4.7 per cent between now and 2021 “without any Trump benefit” from infrastructure spending. Or tweets to that effect.
However, Ashtead, as the second-biggest operator in the US, believes it can go faster. Hence its commitment to making double-digit revenue growth the rule, not the exception, over that same period.
Such confidence in a US structural shift will be tested by the market’s cyclicality. One analyst warned of Ashtead’s vulnerability to an economic slowdown or to “the Trump factor”, if the president’s potential to deliver falls short of tweeted expectations.
Ashtead suggests that two factors can allay these concerns.
First, the steady shift to rental since 2006 suggests it is not a temporary reaction to the financial crisis — and will continue in all conditions.
Second, the 5,000 other, much smaller, US rental companies provide scope for consolidation. Ashtead spent £437m on bolt-on acquisitions last year and net debt of only 1.5 times earnings gives plenty of scope for more.
Most tellingly, Ashtead, unlike other companies, does not categorise acquisition costs as “exceptional items” in its accounts.
Because, like politicians on both sides of the Atlantic, it doesn’t consider buying blue-collar support the exception any more.
Punch drunk?
To this columnist, as a 14-year old cricketer in his club’s Sunday third XI, Heineken was the best beer imaginable.
Not because it refreshed the parts other beers couldn’t reach. But because it was the only beer within reach.
It was poured liberally into the glasses of players of all ages, by jug-wielding half-century-makers and five-wicket takers. It was some years before it finally dawned that this was probably not the best lager in the world.
Punch Taverns’ customers have reached this conclusion a lot quicker.
When Heineken’s £403m takeover of their pubs was first mooted, they railed at the notion that 85 per cent of beers stocked might be the Dutch company’s own brands.
Among its other offerings in the “cooking lager” category are Fosters and Amstel. Even Heineken’s Lawson Mountstevens — who sounds like he might have walked into our third XI, if not a Punch boozer — admitted that only 15 per cent of beers at its existing outlets were from other brewers.
All of which makes yesterday’s ruling by the Competition and Markets Authority seem like some of those barrels in the pavilion: a bit off.
It concluded that, in 33 areas of the country, the Punch takeover would reduce competition to such an extent that pricing and service suffer. But it dismissed “any potential reduction” in choice as only “limited”.
Heineken now has a week to address those concerns over price and service. However, one suspects that customers might prefer a little more choice to the forced smile of a landlord just back from a training course, giving 5p change from a fiver.
Monitise IT? Monetise it!
How not to monetise a fintech group:
1) Become a fintech before the term has been invented; 2) Spend loads on bespoke products for banks; 3) Neglect to make a profit; 4) Let your biggest backer develop its own solution; 5) Sell to US rival for 7 per cent of peak value; 6) Call yourself Monitise; 7) Spell it with an ‘i’, so journalists using spellcheck get your name wrong every time.
matthew.vincent@ft.com