11.12.2012

Ashtead raises full year forecasts

Ashtead, owner of Sunbelt Rentals in the US and A-Plant in the UK has reported a strong first half and raised its full year projections.

The company saw revenues rise 17 percent to £680.4 million, while pre-tax profits jumped 34 percent, this after an £18 million cost of re-financing its debt to take advantage of lower rates and a £7 million revaluation of assets.

The second quarter saw revenues improve 17 percent to £355.4 million, while pre-tax profits climbed 56 percent to £78 million.

In the USA Sunbelt half year revenues increased almost 18 percent to $913.2 million, thanks to a 10 percent improvement in equipment on rent, taking utilisation to 72 percent, while rental rate improvements pushed yields up five percent. As a result operating income grew by 146 percent to $254.1 million.

In the second quarter revenues improved 16 percent to $482.4 million, with operating income of $139 million- up 40 percent on the same time last year.

In the UK A-Plant improved revenues by 10.5 percent to £103.6 million, thanks to a nine percent lift in machines on rent, offset by a two percent fall in equipment yields. Operating profits were up 40 percent to £7.4 million.
In the second quarter revenues improved 13 percent to £53.9 million with operating profits jumped 45 percent to £3.8 million.

Capital expenditure for the half year was £341 million, which helped reduce the average age of the group’s fleet from 39 months to 32 months.

Chief executive, Geoff Drabble said: "It is pleasing to report another quarter where strong revenue growth and on-going operational efficiency have delivered record first half pre-tax profits. With this momentum clearly established in the business we now anticipate a full year profit ahead of our earlier expectations. Beyond the current financial year we remain well-placed to see growth over the medium term from either continued structural change or end market recovery."

"We are also generating high margins which, together with our much larger and younger fleet, results in an ability to fund significant growth whilst continuing to reduce leverage. Therefore, we expect net debt to EBITDA leverage to be sustained below two times. With a broad range of metrics already at record levels at this stage in the cycle, together with a strong balance sheet to support medium term growth opportunities, the Board looks forward with confidence."

Vertikal Comment

Another excellent set of numbers from Ashtead, the company continues to outperform the market in North America and will probably benefit from the merger of United Rentals and RSC.

In the UK A-Plant is now progressing well, particularly in terms of profitability, the only negative is the two percent fall in rental yield – probably due to a fall in some rental rates. Some of this may be due to the slow period that many rental companies saw this summer during the Olympics, hopefully rental rate discipline will help this improve in the second half.

Overall though the group is clearly on a roll which is an ideal position to be in at this point of the business cycle.