05.03.2013

Profits soar at Ashtead

Ashtead, owner of Sunbelt and A-Plant, has issued its nine month results which show strong growth in revenues and profits.

At the group level revenues were up 19 percent to £1.02 billion, while pre-tax profits jumped 60 percent to £165.2 million. Underlying profit growth – without re-financing costs - was even stronger.

In the USA Sunbelt revenues increased 21 percent to $1.37 billion for the nine months, while operating profits jumped 56 percent to $357.6 million.

Ashtead says that Sunbelts strong growth was helped along by the impact of Hurricane Sandy in the third quarter, possibly contributing an additional $15 million of revenues. The fleet was 11 percent larger, while utilisation dropped one percent to 71 percent, this combined with improved rates helped boost rental yield by seven percent.

In the UK A-Plant revenues improved by a more modest 11 percent to £153.4 million, while operating profits jumped almost 70 percent to £9.1 million.
A-Plant’s rental fleet was 10 percent larger on average for the period, offset by a two percent decline in yield.

Group capital expenditure for the nine months increased 27 percent to £427 million gross, £349 million net of used equipment sales – up 26 percent. At the end of January the group's rental fleet had an average age of 32 months, compared to 40 months in 2012.

Ashtead says that it expects to spend around £550 million for the full year, which will include the pulling forward of around $100 million of expenditure previously planned for fiscal 2014. After disposals net capital expenditure is expected to be around £450 million. It expects to maintain similar levels to this in 2014.

Ashtead's chief executive Geoff Drabble said: "It is pleasing to report another quarter where strong revenue growth and ongoing operational efficiency have delivered record nine month profits of £194 million. With this momentum clearly established in the business, we now anticipate a full year profit ahead of our earlier expectations.”

“To further support ongoing market opportunities, we plan to pull forward around $100 million of fleet expenditure previously planned for fiscal 2014 into the fourth quarter of this year. This will have no impact on our stated intention to sustain leverage 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

This is another excellent set of results from Ashtead, while it continues to grow relentlessly in the USA it has also managed to outperform the market in the UK with a very respectable improvement in revenues and a good recovery in profitability.

The group is well placed to continue this trend over the next two or three years, which is clearly why its share price is looking so healthy. In addition to more growth from economic improvements over the next couple of years or so, the company is also in a position to take advantage of new opportunities that may arise.

Subject to economic meltdown, the future looks bright for Ashtead.