20.06.2012

Ashtead rises 21%

Ashtead, owner of Sunbelt in the USA and A-Plant in the UK has published its full year results for the fiscal year to the end of April.

Total revenues for the year were £1.13 billion, 21 percent higher than in the previous year. Underlying pre-tax profits more than tripled to £130.6 million, if exceptional charges/income are included the improvement is more pronounced at £134.8 million this year compared to just £1.7 million last year.

Looking at Sunbelt total revenues were $1.5 billion, up 23 percent on last year, while operating profits jumped almost 79 percent to $289.9 million. Rental revenue also grew 23 percent to $1,335 million, thanks to a 13 percent increase in average fleet on rent and a seven percent yield improvement.

In the UK A-Plant revenues were up nine percent to £188.9 million, while operating income more than doubled to £7.3 million. The volume of equipment on rent grew just one percent but the overall yield was up by six percent.

Capital expenditure for the year was £476 million, compared to £225 million the previous year, of which £426 million was spent on replacing equipment in the rental fleet and the balance spent on delivery vehicles, property improvements and computers.

The company sold £90 million worth of equipment leaving a net capital expenditure for the year of £386 million compare to £160 million the prior year. The average age of the group's rental fleet at the end of April was 37 months compared to 44 months 12 months ago.

Ashtead says that some equipment deliveries originally scheduled for May were brought forward into April, raising last year’s expenditure, however this will also lower this year’s spend to reflect those early deliveries with the current plan to spend around £450 million.

Ashtead's chief executive, Geoff Drabble said: "We are delighted to report record Group profits, encouragingly delivered against a backdrop of end construction markets remaining at historically low levels.”

“This performance demonstrates the success of our largely organic investment strategy and our ability to generate significant revenue growth from market share gains and translate this into stronger margins through improved operational efficiency. The momentum we have established, and the flexibility provided by our strong balance sheet, allows us to anticipate further growth with or without end market recovery. As a result, it is likely that our profits in the coming year will be ahead of our previous expectations."

Vertikal Comment

Another very good set of numbers from Ashtead, the company is going through a very strong phase and appears to be getting most things right. In North America it still has huge potential for growth and could well benefit from the current merger of the regions two largest rental companies United and RSC.

In the UK the company has a harder job, but last year’s effort and improved rate discipline looks to have paid off handsomely. In a tough market with slow growth significant expansion is hard, however there is plenty of potential for bottom line improvement through rates and utilisation improvements, driven by quality of service and canny equipment additions.

There is also some potential for acquisitions, both very large and smaller bolt on opportunities.

All in all Ashtead looks set for another good year