08.12.2011

Ashtead triples profits

Ashtead, owner of Sunbelt in the USA and A-Plant in the UK has reported a very strong first half with profits up 351 percent.

Six month revenues were £575.5 million, 24 percent higher than in the same period last year, meanwhile pre-tax profits were up 351 percent to £82.9 million.

The trend increased in the second quarter with revenues rising 27 percent to £307 million, while pre-tax profits were up more than five-fold from £9.6 million to £49.8 million. The company has also said that November saw similar levels of growth, both in the US and the UK.

Looking at the half year numbers for the separate entities, Sunbelt revenues climbed 26 percent to $775.8 million, while operating profits jumped 75 percent to $173.5 million. The company benefited from a 12 percent increase in fleet out on rent, thanks to an eight percent larger fleet, with utilisation rising from 71 to 73 percent, all of which resulted in a seven percent higher yield. The acquisition of Empire Scaffold also contributed around $24 million.

In the UK A-Plant revenues grew by 14 percent to £93.7 million, while operating profits increased by 26 percent to £5.3 million. Physical utilisation edged up two percent, while rate increases pushed the yield up six percent.

Capital expenditure in the first half was £253 million gross - £212 million net of disposals, compared to £96 million and £72 million last year. The company expects expenditure on the fleet for the full year to be around £400 million, with the next tranche of deliveries due in March and April.

The average age of the group's rental fleet as of the end of October was 39 months, compared to 44 months a year ago.

Chief executive Geoff Drabble said: "We are delighted to report record first half pre-tax profits in end markets which remain well below previous peaks. Market share gains, the on-going structural shift to rental in the US and operational efficiency meant we delivered a very strong performance across a broad range of metrics despite end construction markets being at a cyclical low point. This is encouraging for both the short-term, where we expect a continuation of current trends, and the longer term where, when cyclical recovery comes, we expect to benefit significantly.”

“With our robust debt structure, substantial capacity to fund fleet growth and the well-established momentum in the business we now anticipate a full year profit substantially ahead of our earlier expectations."

Vertikal Comment

This is an exceptional result from Ashtead in every way as it benefits from a strong demand and it joins other major players in pushing rental rates to more sustainable levels. This is particularly true in the USA, but it is also encouraging to see A-Plant getting its rate up.

Once again another set of encouraging numbers and a positive outlook in uncertain times.