TOP RENTAL INDUSTRY

The IRN100 list shows the strength of the sector, but there is no doubt that one region was the driving force

The disparity in growth between North America and the rest of the world was striking in the IRN100, a listing of the world’s top 100 rental companies by sales, of which this is an edited version. The data showed that rental companies in the US and Canada posted an average revenue growth of 14.9% compared to less than 4% for companies elsewhere, with the exception of China.

The top three companies – United Rentals, Sunbelt (Ashtead) and Herc – are entirely or mostly active in the region. It is home to seven companies with revenues exceeding €1 billion (US$1.08 billion), ahead of Europe, which has five. United’s acquisition of Ahern Rentals as 2022 came to a close – the biggest rental deal for several years – came too late to have a significant impact on 2022 revenues.

Total revenue for the top 100 companies in 2022 was €66.2 billion (US$71.6 billion), which is up from €56.9 billion (US$61.5) in 2021. Corrected against exchange rate changes, this represented a 14.0% increase over 2021. The largest 15 North American firms constituted 45% of the total, compared to 22% for the 15 largest Europeans.

The rental sector has seen increasing demand globally, although North America has been especially strong

The difference between North America and the rest is backed by research by the European rental association (ERA) and the American Rental Association (ARA:) the latter consistently highlighting high growth rates, while the ERA is reporting modest expansion.

Notable rises

The headline growth figure for North America holds within it some quite dramatic moves. We don’t have official figures for EquipmentShare, but believe our estimate of US$1 billion in rental-related revenues to be reasonable. The company is expected to add further rental locations and equipment in 2023/4.

We possibly under-reported in our estimate for 2021, which explains its dramatic climb up the table from position 34 to 16.

H&E Equipment Services is also a mover, rising to number 13. The company has been exiting its equipment sales and crane activities to focus on equipment rental. It is a strategy that seems to be paying off. Among European firms, the generalists Loxam, Boels, Kiloutou and Zeppelin Rental all had years of solid growth, aided in most cases by acquisitions. One suspects that the battle for Europe-wide supremacy between Loxam, Boels and Kiloutou will be an interesting one, with the added spice of United Rentals now having a foothold in the region.

Specialist rental players, whether in power, access or temporary accommodation, continue to make their mark. Three of the top ten – Aggreko, WillScot Mobile Mini and Modulaire – are such companies, and there are many more sprinkled throughout the list, including Australia’s National Pump & Energy (NPE), which makes the list for the first time just as it is being acquired by Atlas Copco.

Japan’s rental companies grew modestly in 2022. They were hindered – at least in terms of the IRN100 survey – by a weaker Yen against the Euro, which saw their Euro revenues artificially lowered compared to 2021.

China’s rental companies continue to expand at remarkable rates, although perhaps there are signs of a slight cooling down. Most of these companies are renting aerial platforms, but there is now one company, XCMG Guanglian Rental, renting general construction equipment. It is a subsidiary of Chinese construction equipment manufacturer XCMG.

Fleet spending

As far as capital investment in fleet is concerned, 2022 was another good year for the equipment suppliers. The top 25 investors in the list (who are not necessarily the largest 25 companies) collectively invested €12.2 billion (US$13.2 billion) in new equipment in 2022, which was a 47% increase on 2021.

Aggreko is a provider of power generation and industrial heating and cooling solutions

That figure, which represents gross capital spending before accounting for sales of used fleet, represents a continuation of the ‘catching up’ process following the pandemic years. The €12.2 billion, and the increase it represents over 2021, is even more remarkable given the supply chain problems facing OEMs. Of course, the increase reflects the higher cost of equipment, but it still represents a big rise over 2021. Imagine what the figure might have been if there were no constraints on supply.

It is worth also saying a few words about some companies that are present in the list, but not explicitly. Sumitomo Corp in Japan, for example, has long owned the Taiyo Kenki rental business in its home country, but it also owns Sunstate Equipment in the US, KRents in Western Canada (through its Canadian business SMS Equipment) and Aver Asia, the South East Asian access rental specialist. Consider these businesses together and Sumitomo becomes a very big rental owner.

Likewise, Malaysian-based Caterpillar dealer Sime Darby operates several rental businesses in the region, most notably Hastings Deering in and Onsite Rental Group, a major player in Australia’s rental sector, which it has recently acquired.

Sammons Industrial, at position 33, the privately owned US business which runs the Briggs Equipment and Sitepro rental companies, is another fast-growing company investing heavily in its fleets. With Sitepro, it is building a new rental company after the splitout from Briggs, and in the UK and Ireland it is acquiring both access rental and forklift dealerships.

Biggest getting bigger

What does the survey tell us about rental consolidation? The ARA estimated the value of the North American rental industry at around US$60 billion (€56 billion).

The top 15 North American’s have total revenues of around €30 billion (US$32.4 billion), so they represent 50% of the market. The top five have a 42% share of the North American total.

For Europe, if the rental market is value at around €27.5 billion (US$29.7 billion) in 2022 (based on ERA figures), then the largest 15 European companies have a share of more than 50%. The market share of the top five is 31%. There is clearly room for further consolidation at the very upper end of the market.

What about when the rental market is considered globally? Nobody compiles consistent statistics for the global market, but if we add together Europe and North America and make estimates for Japan (€10 billion), South America (€1 billion), Middle East (€1 billion), and rest of Asia and Australia (€5 billion), then we get to a total of €100 billion (US$108 billion). That’s a number to be taken as indicative rather than definitive.

That implies that the IRN100 companies represent around 65% of the total, and the top five just short of a quarter of the global market. Here, of course, there is room for far greater consolidation. Although there are many rental companies with operations in several continents, apart from some crane companies (Sarens and Mammoet), there is only one major company, Aggreko, that can be said to have a meaningful global spread of revenues. That will surely change.

What may not change, at least in the short term, is the dominance of North American companies in the list. Everything is bigger in the US, of course, and their rental companies are no exception. iC

ABOUT INTERNATIONAL RENTAL NEWS

International Rental News is essential reading for the growin global rental market. The magazine is published six times a year and also has a show, the International Rental Exhibition. The IRN100, a list of the top 100 rental companies by turnover – of which this article is an edited version, is published in the June issue.