06.03.2012

Ashtead up 23 percent

Ashtead, owner of Sunbelt Rentals in the USA and A-Plant in the UK, has reported its nine month numbers, which show a 23 percent lift in revenues and record third quarter profits.

Revenues for the nine months were £846.8 million, while pre-tax profits came in at £105 million, compared to £28.3 million in the prior year. Looking at the third quarter revenues were up 21 percent to £271.3 million, while the company achieved a record pre-tax profit for the quarter of £20 million, compared to a loss a year earlier of £2 million.

Looking at the two entities separately for the nine months year to date, Sunbelt recorded revenue growth of 25 percent to $1.13 billion, reflecting a 13 percent increase in the fleet on rent and a seven percent improvement in yield (rates /utilisation). The recent acquisition of Empire Scaffold also kicked in for the first time. Operating profit was up by over $100 million to $228.8 million.

In the UK A-Plant also saw business gather momentum, with revenues up over 14 percent to £138.3 million, with a one percent larger fleet and a six percent yield improvement. Operating profits came in at £5.4 million almost 75 percent higher than last year’s £3.1 million.

Group capital expenditure for the period was £336 million gross or £276 million net of used equipment disposals. This compares to £129 and £89 million last year. The company now expects full year capital expenditure to come in around £425 million.

The average age of the group's rental fleet at the end of January was 40 months compared to 45 months at the same point in 2011.
Ashtead says that the fourth quarter indicates that it will finish the year with profits significantly ahead of its forecasts.

Chief executive, Geoff Drabble said: "Once again, we are pleased to report a strong set of results. Our record third quarter pre-tax profit, whilst undoubtedly being helped by favourable weather conditions, is predominantly due to the continuation of the momentum we have established over recent quarters. We continue to invest strongly in organic growth, with our rental fleet now being 11 percent larger and an average of five months younger than a year ago. However, with a continued focus on margin improvement, this investment has been accompanied by a reduction in net debt to EBITDA leverage to 2.5 times from 2.8 times in 2011.

“The board remains committed to a strategy of strong organic growth and continues to believe that we are well positioned to take advantage of a continuation of current market trends. We therefore now anticipate a full year profit significantly ahead of our earlier expectations."

Vertikal Comment

This is another excellent set of results from Ashtead, with its increased capital expenditure really kicking in at the ideal point in the economic cycle. While Sunbelt continues to blaze the trail, A-Plant is showing strong signs of picking up the pace in what is probably a tougher market at the moment.