19.06.2010

Ashtead cranks up capex

Ashtead, owner of Sunbelt Rentals in the USA and A-Plant in the UK has released its fourth quarter and full year results and announced that it is stepping up its investment in new equipment, in spite of lower revenues and profits.

Total group revenues for the year to the end of March 2010 were £836.8 million, 25 percent lower than last year. Revenues in the fourth quarter were down just three percent to £210 million.

Sunbelt revenues were just over $1 billion a fall of 25 percent on a fleet 10 percent smaller, while rates slipped 16 percent.

A-Plant revenues were £162.3 million 13 percent down on last year – rental revenues fell 21 percent on a fleet 10 percent smaller, while rates fell 12 percent.

Both companies managed to generate an operating profit, with Sunbelt slipping over 50 percent to $117.6 million, while A-Plant’s profits plummeted from £16.1 million last year to £1.8 million in the year just ended.

Group pre-tax profits for the year were £5 million, compared to £87.4 million, a fall of 95 percent. While in the fourth quarter the group posted a loss of £3.1 million compared to a loss of £200,000 last year.

With the market beginning to pick up in May Ashtead says that it will increase its capital expenditure from £63 million in the year just ended to £225 million in the year just started. The funds will be spent on fleet replacement, rather than expansion, although the company says that if the market shows stronger signs of recovery it will consider increasing it’s spending.

The average age of the group’s fleet was 44 months at the end of the financial year, compared to 35 months 12 months earlier. The group sold £32 million worth of used equipment during the year.

Chief executive, Geoff Drabble, said: “Having taken decisive and prompt actions to prepare the business for the contraction in our end
markets we have maintained healthy margins and strong cash generation whilst gaining market share. Although market conditions remain difficult we are pleased to have seen some early signs of improvement in Q4, particularly in the US.”

“In the US we continue to believe that we will see stabilisation in markets in the current year with improving trends through 2011. In the UK, whilst current markets are also stabilising, uncertainty around the impact of public sector spending cuts makes the medium term less certain. In preparation for the next phase of the cycle, we have started a fleet reinvestment programme, funded from operating cash flow. Our well structured debt facility means that we can react quickly if markets differ materially from those we anticipate.”

“Having strengthened our market position in the year just ended and with the flexibility provided by our strong balance sheet, the board believes that the group is well positioned for the future.”

"Fleet on rent and revenue continued to be encouraging in both of our markets during May,supporting our view that the winter of 2010 was the bottom of the cycle.
In the US we continue to believe that we will see stabilisation in markets in the current year with improving trends through 2011. In the UK, whilst current markets are also stabilising, uncertainty around the impact of public sector spending cuts makes the medium term less certain."

"In preparation for the next phase of the cycle, we have started a fleet reinvestment
programme, funded from operating cash flow. Our well structured debt facility means that we can react quickly if markets differ materially from those we anticipate.
Having strengthened our market position in the year just ended and with the flexibility
provided by our strong balance sheet, the Board believes that the Group is well positioned for the future."