12.12.2007

Ashtead up 24%

Ashtead the owner of Sunbelt in North America and A-Plant in the UK, the world’s second largest rental company, has reported revenues up 24 percent to £523.5 million.

Pre tax profits were £76 million an underlying increase of over 40 percent. (The group reported a £30 million loss at this point last year after adjustments and exceptionals)

A-Plant the UK part of the business posted revenues of £108.5 an increase of seven percent when compared to A-Plant and Lux Traffic over the same period in 2006.

Four percent of the increase came from an increase in the company’s fleet while a three percent improvement in physical utilisation made up the rest. Physical utilisation hit a new record at 71 percent.

Capital expenditure in the first half was £77.2 million, or which £32 million was to expand the fleet and £45 was replacement.

Operating income was up 41 percent to £16.5 million, a margin of 15.2 percent compared to only 11.6 percent in 2006.

Sunbelt

Sunbelt posted revenues in dollars of $809 million two percent down on the combined figures of Sunbelt and Nations Rent over the same period of 2006. One cause of the lower numbers is Ashtead’s policy of dropping the low margin equipment sales business that was a significant part of Nations Rent’s revenue numbers. When sales are excluded, Sunbelts revenues improved by two percent.

Operating income grew by 27 percent to $196.6 million improving the margin from less than 19 percent to 24 percent. Dollar utilisation edged up a percentage point to 63 percent while physical utilisation dropped two percent points to 70 percent.

Capital expenditure was $313.3 million up 49 percent on 2006 $192.1 million of this was aimed at fleet expansion while $121.1 was replacements.

Outlook

Ashtead says the inspite of general concerns about the future direction of the US economy, its experience on the ground is that the US non residential construction market, which is over 90 percent of Sunbelt's business, continues to grow.

The institutional element of non Residential construction which represents 50 percent of the total and includes categories such as schools, hospitals and transportation, continues to be particularly strong, driven significantly by the requirement for infrastructure following the residential boom of 2000 to 2005.

It adds that whilst the commercial element is more likely to be affected by a prolonged credit crunch it notes that corporate profits remain good, labour markets are healthy and the industrial and manufacturing sectors remain strong.

In the UK its cites major projects, such as Crossrail, the Olympics and utility infrastructure spending as positive market drivers likely to more than offset any potential slowdown in the development of high profile commercial office space.

Ashtead's chief executive, Geoff Drabble said: "This has been a key period for Ashtead and I am delighted that these results show that we have made excellent progress. In the US the integration of NationsRent has been completed successfully and we are now driving the combined business back towards the market-leading margins and returns achieved previously by Sunbelt alone.”

“In the UK the work we have undertaken to reposition A-Plant has led to a significant improvement in its performance and with its increasing prominence in the market I see this improvement continuing.”

“Our experience on the ground, supported by many lead indicators, is that activity levels in our primary markets in the US and UK remain good being driven primarily by a mix of corporate and public sector investment. Notwithstanding current concerns over broader macro economic conditions, we continue to see strong demand for our equipment and services. We have the added security of being a late cycle business and a sufficiently flexible business model to react effectively to any changes, as yet unseen, which may occur in our markets.”