10.12.2014

Ashtead soars higher

Ashtead, owner of Sunbelt in the USA and A-Plant in the UK, has posted strong first half results.

First half revenues at Sunbelt Rentals were $1.37 billion, an increase of almost 24 percent, while operating profits grew over 30 percent to $449.3 million. In the same period A-Plant boosted first half revenues by 20 percent to £165.6 million with operating profits up 71 percent to of £29.7 million.

Sunbelt revenue increases were largely due to improvements at existing locations, with the fleet on rent up 23 percent and yield up two percent. A-Plant increased the fleet by 11 percent and saw a six percent increase in yield due to better rates and utilisation.

Group revenues for the first six months increased 16 percent for the period to £987.3 million, while pre-tax profits jumped 33 percent to £259.2 million.
Moving on to the second quarter, Sunbelt saw revenues improve by more than 25 percent to $729.5 million with operating profits rising 32 percent to $242 million. A-Plant revenues increased 18 percent to £84 million with operating profits of £14.8 million, 75 percent higher than in the same period last year.

Ashtead as a whole saw second quarter revenues rise 24 percent to £529.4 million, while pre-tax profits increased 33 percent to £141.7 million.

Capital expenditure in the first six months was £588 million over 30 percent higher than in 2013, helping reduce the average age of the fleet from 29 to 26 months, the youngest it has been for many years.

Based on these results the company says that, in combination with a stronger dollar, it is raising its full year expectations.

Chief executive Geoff Drabble said: "The Group delivered another strong quarter with record underlying pre-tax profits of £266 million, up 33 percent on the prior year. It was particularly pleasing to see a strong contribution from both Sunbelt and A-Plant. We continue to execute on our strategy, focused on organic growth supplemented by bolt-on acquisitions. We invested £588 million in capital expenditure and a further £107 million on bolt-on acquisitions in the period. Given the profitable growth opportunities evident in our markets, we are increasing our full year guidance for capital expenditure to a range of £925 million to £975 million.”

“Even with these significant levels of investment, we continue to grow responsibly, generating strong returns and maintaining leverage within our stated objectives. With both divisions performing well, recovering end markets, and a proven track record of market share gains, we now anticipate a full year result ahead of our previous expectations."

Vertikal Comment

Another superb set of numbers from Ashtead, which appears to be on a strong roll, with Sunbelt continuing its relentless progress and improvement, while A-Plant in the UK has really come to life and is making strong gains in revenues and market share. With companies like Hewden faltering along with one or two other UK rental companies, A-Plant looks well placed to continue to increase its market share in a growing market.

Ashtead is very well placed on both sides of the Atlantic now with a young fleet a motivated team, and - barring any upsets - most of the next upward economic cycle ahead of it. As a result the company looks set for several years of exceptional growth and profits, all of which is reflected in the share price.