11.05.2009

Ashtead trading update

Ashtead, owner of A-Plant and Sunbelt has issued a fourth quarter trading statement which indicates revenues will be down 24 percent on the same period last year, in line with its expectations. In spite of this the company is upbeat about rental volumes, which it says have held up relatively well.

Rates however have deteriorated faster than it expected, leaving its profits for the year at the lower end of its forecasts and causing it to downgrade its profit forecasts for 2009/2010.

The statement says: “Our businesses are well positioned to continue to benefit from the major government-financed infrastructure programmes and we are also gaining market share in our core markets.”

“Rental rate deterioration has, however, been greater than anticipated in recent months due to the weak economy and a harsh winter, leading to a year-on-year decline in group fourth quarter rental revenues at constant exchange rates of 24 percent.”

“The cost reduction measures originally announced with our half year results last December are now substantially complete. These comprised the closure of underperforming rental stores, the disposal of rental equipment made surplus by the decline in rental demand and headcount reductions. The final cost reductions significantly exceed our original target and mean that, across the group, our current annualised local currency cost base is now around £100 million lower than it was last summer.”

The one-time exceptional charge incurred in delivering these savings, much of which is non-cash, is around £75 million. Including the proceeds realised from the sale of the surplus equipment, the programme has generated a net cash inflow of around £40 million.”

Ashtead will publish its full year results for the year to the end of April in mid June.