04.09.2013

Ashtead breaks records

Ashtead, owner of Sunbelt Rentals in the USA and A-Plant in the UK has posted record first quarter results.

The company saw revenues increase by 24 percent to £410 million, while pre-tax profits jumped 59 percent to a new record of £99.5 million.

In the USA Sunbelt continued on its solid growth path with total revenues up 22 percent to $526.3 million, rental revenues actually jumped 25 percent thanks to a 17 percent larger fleet and a six percent increase in yield - thanks to utilisation of 73 percent and higher rental rates. The lower percentage for total revenue is due to lower sales of used equipment. Sunbelt’s operating profit jumped over 40 percent to $160.7 million.

Back in the UK A-Plant made equally impressive gains with revenues rising by 34 percent to £66.6 million, with rental revenues up 35 percent. Operating profit more than doubled to £7.9 million thanks to a nine percent larger fleet and a three percent improvement in yield.

The company has so far invested £279 million of capital expenditure which has helped reduce the average age of its rental fleet from 33 to 29 months. The company says that it is on plan for a total spend this financial year of £560 million - or £470 million after disposals.

Looking forward Ashtead says that trading in August remains very positive and with four months now under its belt it is confident that it will exceed total expectations for the full year.

Chief executive Geoff Drabble said: "The first quarter saw a continuation of the momentum established in the business, resulting in pre-tax profit of £99m. This performance is being driven by strong revenue growth and operational efficiency as demonstrated by the improvement in margins and return on investment.”

“Our focus remains on organic growth with £279m of capital expenditure in the first quarter. Whilst we continue to invest significantly in the business, our strong margins allow us to do this while delivering.As a result of this impressive performance, and with a strong balance sheet to support future growth, we now anticipate a full year result ahead of our previous expectations."

Vertikal Comment

Another ‘stonking’ set of numbers from Ashtead which goes from strength to strength in a very solid and measured manner. The improvement in A-Plant is particularly notable in that the UK market is at a much earlier stage of recovery than North America, and some other companies that compete head to head with A-Plant are really struggling at the moment and blaming the market for their difficulties.

Back in the US a 25 percent jump in rental revenues after substantial growth last year is nothing but impressive. The business is in excellent shape to benefit from the potential upward swing in the business cycle. No wonder it has seen a run on its share price this year.