08.03.2011

Ashtead up 15%

Ashtead, owner of Sunbelt Rentals in the US and A-Plant in the UK has reported a 15 percent rise in third quarter revenues.

Looking first at the nine month to the end of January, revenues climbed eight percent to £705.7 million while pre-tax profits more than tripled from £8.1 million last year to £28.3 million this, although after exceptional- one-off costs the result is £21.6 million this year compared to £2.9 million last year.

Sunbelt revenues for the same period – in dollars - are up seven percent to $903.7 million, while operating profits came in at $128.4 million compared to $92.2 million, an increase of almost 40 percent. This reflects a five percent improvement in rental yield on a fleet that is four percent larger.

A-Plant managed to achieve exactly the same revenues of £121.2 million, but managed to improve its operating profit from £1.3 million to £3.1 million, with rental rates improving in the third quarter by around one percent and lower costs.

Group revenues for the third quarter to the end of January were £221.4 million 15 percent up on the same quarter last year while the pre-tax loss was reduced to £1.7 million from a loss of £12 million in 2010. In the same period Sunbelt saw revenues in sterling climb 22 percent with profits more than doubling, while A-Plant was up over four percent with a reduced operating loss.

Capital expenditure for the nine months to date has been £129 million, compared to £35 million in the same period last year, while the company sold off £40 million of used equipment compared to £19 million in the first nine months of 2009/10. In spite of the increased expenditure and disposals the average age of the group’s fleet moved up from 41 months last year to 45 months at the end of January. Net debt was cut from £829 million to £774 million.

Ashtead's chief executive, Geoff Drabble, said: "It was encouraging to see our improving year on year trends in revenue and profitability continue in the third quarter, our seasonally most difficult period. Our high levels of fleet on rent and our continued focus on yield and costs have produced strong results for the first nine months with profits now £20m ahead of last year.”

“Whilst we remain cautious about predicting short term recoveries in end construction markets, the momentum we have established in difficult conditions reinforces the Board's long held confidence in the medium term attractiveness of our rental markets.”

“Based on our third quarter performance which continued in February, it is now likely that the full year outcome will exceed our earlier expectations."

Vertikal Comment

This is a very positive result from Ashtead and encouraging for the equipment rental and manufacturing industry in general. It is clear though that major rental companies will need to step up investment in new equipment, which are now beginning to do.

The improved rates on both sides of the Atlantic is a positive sign, particularly in the UK where A-Plant has at times (as have many others of course) been accused of being one of the low rate players, at least in the powered access business. Hopefully this anecdotal information is historically related and that the improving rates reported today are a sign that, if it was the case, it no longer is.

All in all another very positive sign for the industry and a great result from the Ashtead management team.