Profitability boost for United
US based United Rentals has issued its first quarter results with lower revenues but higher profits.
Total revenues for the quarter were around six percent lower at $2.06 billion, driven mostly by a 6.5 percent fall in rental revenues, mostly within the general rental division. Rental revenues have been improving and showed positive year on year growth in March. Pre-tax profit though jumped 22 percent to $275 million.
Capital expenditure was $295 million, up 42 percent on the same quarter last year. The company also managed to cut its net debt by $656 million. As a result of the improving business climate the company has increased its full year outlook, forecasting total revenues of $9 to $9.45 billion, while gross capital expenditure for the year is estimated at $2.2 to $2.4 billion.
Chief executive Matthew Flannery, said: “We were very pleased with our first quarter results and the strong start to our year, as our key end-markets continue to rebound from the challenges of 2020. Sentiment among our customers continues to improve, and we are well prepared to support them as we enter the busiest part of our season.”
“The recovery that we’ve seen since the middle of last year remains evident across our business, and virtually all indicators point to these trends continuing. As such, we are raising our full year guidance to reflect our expectations for stronger growth in our core rental business and increased used equipment sales. Most importantly, we are leveraging our significant competitive advantages to add value for both our customers and our investors.”
The overall message here is positive with everything boding well for the year as a whole. This and some of the other reports we have written up suggest that we are increasingly likely to see an equipment supply shortage by the time we reach mid year, if not before.
The current microchip shortage is also likely to cause issues for manufacturers as will limits on the supply of other components. In a fully functioning market this ought to lead to higher prices for both sales and rental. The size of new equipment discounts and availability of subsidised finance are both likely to shrink, however its hard to image rental rates will rise?
Back to United Rentals, a strong start to the year and given the latest acquisition United might just come close to hitting the $10 billion mark in 2021.