10.12.2013

Record profits for Ashtead

Ashtead, owner of Sunbelt in the USA and A-Plant in the UK has reported record first half profits.

The group achieved revenues if £849.7 million, 23 percent higher than for the same period last year, pre-tax profits jumped 82 percent to £207.8 million a new half year record. Looking at the second quarter revenues were also up 23 percent to £439.2 million, while profits jumped 41 percent to £110.4 million.

Looking at the two operating businesses, half year revenues at Sunbelt increased more than 21 percent to $1.11 billion, while operating profits increased almost 40 percent to $345 million. Rental revenue growth was driven by a 17 percent increase in fleet on rent, a one percent increase in utilisation to 73 percent and a six percent improvement in yield.

In the UK revenues at A-Plant jumped over 33 percent to £138 million some of which is due to the addition of Eve Trakway in May of this year. The increase in rental revenues reflects 23 percent more fleet on rent and a 10 percent improvement in yield, which includes Eve's peak period of events work. Rental revenue growth excluding Eve was 16 percent, reflecting 10 percent more fleet on rent and a five percent improvement in yield. As a result operating profit increased almost 250 percent to £17.4 million.

Capital expenditure in the first half of the year was £451 million compared to £341 million last year taking the average age of the group's rental fleet down to 29 months from 32 months a year ago.

The company says that trading in November remained strong and that it expects the full year profits towards the upper end of expectations.
Chief executive Geoff Drabble said: "The momentum within the business continued through the second quarter, resulting in record half year pre-tax profits. Once again, Sunbelt in the US was the main driver of our growth but it was pleasing to see another strong performance from A-Plant.”

“Our strategy continues to be focused largely on organic growth, supplemented by a range of bolt-on acquisitions. We invested a net £401 million in our fleet during the first half and a further £61 million on acquisitions. However, at the same time, our strong margins allowed us to reduce leverage to 2.1 times EBITDA.”

“Activity on the ground and lead indicators remain very healthy and, as a result, we have increased our full year capital guidance to £700 million to support our customers during an anticipated strong Spring of 2014. As a result, we now anticipate a full year profit towards the upper end of current expectations and the Board looks forward to the medium term with increasing confidence."

Vertikal Comment

Another cracking set of results from Ashtead, which seems to go from strength to strength, while the UK operation is still out of balance with its North American business, it has clearly made strong progress, with a solid boost from Eve. The A-Plant business is well in the running to catch or overtake the other two major equipment rental companies Speedy and HSS at the top of the UK rental market.

Sunbelt continues to grow with small, yet strategically important acquisitions, which it appears very well equipped to absorb and incorporate. The future looks bright.