03.12.2009

Ashtead posts second quarter profit rise

Ashtead owner of Sunbelt in the USA and A-Plant in the UK has released half year and second quarter results, with profits jumping over 150 percent while overall revenues continue to fall.

Revenues for the first half were down 24 percent to £441 million, while pre-tax profits declined 53 percent to £18.6 million.

The second quarter revenues £218 million 29 percent lower than the same quarter in 2008, however pre tax profits for the quarter jumped to £10.4 million, compared to £4.3 million last year. Due entirely to the fact that last years results included a £27 million one off restructuring charge and higher financing costs.

Sunbelt, one of the largest rental companies in North America saw first half revenues in dollars fall 34 percent to $576 million while operating income dropped 57 percent to $80 million. The results came from an active fleet on rent that was 13 percent smaller than the previous year, but rates overall have fallen 20 percent.

In the second quarter Sunbelt revenues were $288 million, a fall of 36 percent, while operating income slipped 57 percent to $41 million.

A-Plant revenues for the first half were £84 million, 29 percent lower than last year, while operating income was £3.1 million compared to over £14 million in 2008.

In the second quarter revenues dipped 29 percent to £41.4 million, while operating income improved significantly from a loss of £4.9 million last year to a profit of £1.8 million this year. The company’s active rental fleet during the first half was 16 percent smaller while rates overall slipped 11 percent.

Capital expenditure in the first half was £28.5 million compared to £201.5 million during the same period last year. Disposal proceeds were £13.2 million down from £40.7 million last year.

The company says that it retains significant ability to age its fleet and sustain free cash flow. The average age of the group's rental fleet at 31 October 2009 was 39 months, compared to 32 months at this time last year.

Ashtead says that it expects to spend around £100 million on its fleet, all of which will be for replacement equipment.

Ashtead's chief executive, Geoff Drabble, said: "These results show that, while market conditions have remained difficult throughout the first half, the actions we took last winter to cut costs and reduce fleet size prepared our businesses for the conditions ahead and ensured that margins held up well.”

"We maintain the view that market conditions will remain difficult throughout
the second half of the current financial year as more private sector projects
funded prior to the downturn are completed and overall activity declines."

"However, there are reasons to believe that this seasonally difficult period may
represent the bottom or near bottom of our cycle. Beyond the end of this fiscal
year, we anticipate that markets will remain difficult in 2010 but that the
effect of US stimulus work and a recovering residential construction market
will benefit us until general economic recovery brings an improvement in
commercial construction, most likely towards the end of our 2010/11 fiscal
year"

“Whilst we remain focused on current trading, our timely decision to extend the
maturity of our asset-based loan until November 2013 allows us to turn our
attention to preparing for the recovery.”