07.09.2010

Ashtead up 8%

Ashtead, owner of Sunbelt in the USA and A-Plant in the UK has reported first quarter revenues up eight percent on the same period last year.

Group revenues were £239.1 million, while pre-tax profits rose by 35 percent to £11.9 million.

Sunbelt saw its revenues increase by four percent to $297.3 million, while its operating profit climbed two percent to $100.8 million.

A-Plant in the UK saw its revenues decline by seven percent to £39.7 million, largely due to lower negotiated rates on large contracts, but operating profits increased by a healthy eight percent.

The group stepped up its capital expenditure in order to prevent a further increase in the average age of its fleet, spending £51 million, compared to just £15 million in the first quarter of last year. It also sold off £10 million worth of older equipment.

Sunbelt spent $62.4 million while A-Plant spent £5.4 million, the average age of the fleet at the end of the period was 44 months. The company says that it is on target to spend a total of £226 million in the year as a whole.

The group managed to reduce its net debt from £872.5 million to £805.5 million during the period.

Ashtead's chief executive, Geoff Drabble said: "We are pleased to announce good Group profit growth for the first quarter, reflecting an improvement in both divisions. Whilst end markets remain fragile, our strong performance in fleet on rent reflects the impact of the responsible correction in fleet sizes throughout the rental industry and increased outsourcing by customers, a trend we expect to continue.”

Gross capital expenditure totalled £51 million as we began the fleet reinvestment programme announced in June. Our investment remains flexible and directed towards replacement not growth as we focus on maintaining the momentum we have established in yield improvement in recent months. We continue to believe in the fundamental strength of the underlying demand and opportunities in our end markets. The business is delivering strong margins and gaining market share which, together with its financial strength, means that the board believes that Ashtead is particularly well placed to benefit as markets recover."

Vertikal Comment

This is another encouraging set of results both in the fact that a major rental company with large access and telehandler fleets is seeing improvements in both revenues, margins and even in some rates. At the same time it is investing again in new equipment again.

While the recovery still has a long way to go before we can all sigh a breath of relief and there will be declines as well as increases along the way, it does increasingly look like the depressing downward trend that kicked off at the start in late 2008 and early 2009 is largely behind us. – I know – don’t speak too soon!