11.07.2005

Ashtead reports strong Improvement

Strong performances by all three Ashtead divisions provided a significant recovery in the group’s results for the year ended 30th April 2005.

Group profit before tax, goodwill amortisation and exceptional items, increased to £25.3million from £7.6million in 2004. while pre-tax profits after these items rose to £16.4million compared with last year’s loss of £33.1million.

In the US, Sunbelt’s profits rose 48 percent on revenues up 15 percent. Ashtead claims that the increases in Sunbelts fortunes relate to a higher market share in an improving market.

In the UK, A-Plant profits almost trebled on revenues only marginally higher than last year at £156.3 million from £155.9million in 2004. Like for like sales revenues grew by 5.2 Percent. This growth was achieved in spite of a fleet size shrank by over four percent, compared with last year.

Utilisation increased from 59.9 percent to 64.9 percent while rental rates rose by approximately two percent. The improvement in rental rates gather pace in the fourth quarter, rising to around seven percent..

A- Plant's full year profit virtually trebled to £11.7million (2004 - £4.0 million), representing a margin of 7.5 percent (2004 – 2.6%). The initiative announced earlier this year to increase returns through continuing investment in tool hire equipment is on track with eight additional locations already carrying the tool hire range.

Ashtead say that it will add tools to a further 18 locations over this year.

In terms of major account activity, its top 100 customers provided 35 percent of A-Plant’s revenue in the year.

New five-year contracts were signed with Balfour Beatty Utilities Limited, McNicholas plc and Skanska UK plc, with the latter being a two-year extension to an existing three-year agreement.

A new five year sole supply contract has also be agreed with the Birse Group plc for all their plant and tool requirements.

Vertikal Comment

Ashtead are on the way back, and its recovery is gathering pace. In terms of access equipment, Sunbelt has a very strong position in the North American market, which is currently very bouyant. In the UK, A-Plant has slipped back, as the company concentrates on expanding its tool hire business. It is though, still a major player in the market and, given its depot network, still a force to be reckoned with.

With American Steve Shaunessy in the driving seat and the shake out of the UK self propelled rental market almost complete, A-Plant is likely to be a major meneficiary.

A-Plant are also well placed with Telescopic handler rental and could take a leaf from VP's books in making this more of a specialist division, possibly allying it with the powered access?

Ashtead shares might be worth a look?