03.09.2014

A strong start to the year for Ashtead

Ashtead, owner of Sunbelt in the USA and A-Plant in the UK has reported further strong growth in its first fiscal quarter.

Total revenues increased 12 percent to £458 million with pre-tax profits jumping 21 percent to £117.5 million. As a result Ashtead is increasing its full year forecasts.

Sunbelt achieved another record quarter with revenues increasing 21 percent to $638.4 million, while operating profits were up almost 29 percent to $206.9 million. Rental revenues were boosted by the opening of new locations and acquisitions.

In the UK A-Plant had a very strong quarter with revenues up 22 percent to £81.2 million, while operating profits jumped from £7.9 million last year to £13.7 million this year. The improved performance was driven by a nine percent increase in the fleet and a nine percent improvement in yield, driven by higher rental rates and utilisation.

Capital expenditure for the quarter was £284 million- marginally higher than last year, while sales of used equipment form the fleet totalled £20 million. The group's rental fleet at the end of July had an average age of 26 months compared to 29 months a year ago. The company says that it will increase full year capital expenditure to around £825 to £875 million.

Chief executive, Geoff Drabble said: "We are pleased to report another strong quarter as we continue to capitalise on recovering markets and take further market share in both Sunbelt and A-Plant. Sunbelt delivered 22 percent rental revenue growth and A-Plant 19 percent which, together with a focus on operational efficiency, helped to deliver record underlying pre-tax profits of £120 million.”

“We invested £284 million in capital expenditure and a further £32 million on bolt-on acquisitions in the quarter as we continue our strategy focussed on organic growth supplemented by bolt-on acquisitions. Given the momentum evident in the business, we are increasing our full year guidance for capital expenditure to a range of £825 to £875 million. While we continue to invest heavily in the business, our strong margins allow us to do this while maintaining our leverage discipline.”

As a result of this strong performance, and with a strong balance sheet to support future growth, we now anticipate a full year result ahead of our previous expectations."

strong demand in both our end markets and an ongoing greenfield opening programme, we are increasing our full year capital expenditure guidance to around £825m to £875m. However, we will continue to monitor market conditions and adjust our plans appropriately.

Vertikal Comment

Another sparkling quarter from Ashtead, we seems to have some real momentum behind it now. Of particular interest is the strong performance of A-Plant in the UK which has clearly outpaced the market and has a renewed confidence. The company recently announced a substantial investment in renewing and expanding its UK Access and telehandler fleet and is clearly intent on winning more than its fair share of the upturn in demand coming from a growing construction market in the UK. Perhaps we will see a few UK acquisitions in the year ahead?

In North America Sunbelt is already well placed to benefit from the improving market and has plenty of room for further expansion. 2014/15 should be another excellent year for the group.