03.02.2011

Rates and utilisation improve at United

US based United Rentals has full year and fourth quarter 2010 results which show flat revenues and profitability with improving rates and utilisation helping boost the fourth quarter.

Full year revenues were $2.24 billion down just over 2.5 percent on 2009, while the full year loss before tax was $63 million, compared to $107 million last year. Rental revenues were almost identical year on year- however rates were up 1.2 percent and physical utilisation up 4.5 percent to 65.6 percent for the full year.

In the fourth quarter the story was better- revenues increased more than seven percent to $597 million, while the pre-tax loss was $40 million compared to $49 million in the same period of 2009. Physical utilisation climbed 7.5 percent to 69.5 percent a new record for the fourth quarter.

The company says that it expects the recovery in rates to continue through 2011 with an improvement over the year as a whole of over five percent, while physical utilisation is expected to grow by a further one percent to just over 70 percent.

The average age of United’s rental fleet at the end of December was 47.7 months compared to 42.4 percent at the end of 2009. The company spent a total of $346 million on new rental equipment during the year, compared to $260 million last year.

Chief executive Michael Kneeland said: "We once again outperformed our markets, with double-digit increases in rental revenue and volume, and record time utilisation for the quarter. Underlying these numbers is a systemic focus on profitability that has helped us limit costs and turn the corner on rates. Our year-over-year rate performance was positive for the first time in 15 quarters, driven by an increase in demand and our internal pricing initiatives. This is a very strong close to the year, and gives us excellent momentum going into 2011.”

"This year is about profitable growth for United Rentals. We are continuing to strengthen our metrics, our margins and the levers that drive them, particularly our customer service structure. Our strategy has been to stay in front of key customer segments through the worst of times, earning their confidence for exactly this point in the cycle. As a result, we expect to outpace what we see as a modest recovery in our end markets.”

Vertikal Comment

Another positive indicator for the industry, in the USA United Rentals by far and away the largest aerial lift rental company any lead it takes with rates will be taken up by others helping steer the market back to profitability, which in turn will lead to an increase in fleet replacement.

United has, or had, a policy of maintaining an average fleet age of 36 months with the average now almost a year above that, it will be seeing the effects of running older equipment. What will be interesting is what it learns from that and how it affects its future policies.

At current trends the company ought to see a return to positive profitability in 2011 and will hopefully step up capital expenditure.