06.12.2016

Another strong quarter for Ashtead

Ashtead, owner of Sunbelt Rentals in the USA and A-Plant in the UK has reported a strong first half.

Total revenues for the six months to the end of September were almost 23 percent up on the year at £1.55 billion. Sunbelt saw revenues rise almost eight percent to $1.81 billion, while operating profits jumped over 25 percent to $444 million.

In the UK A-Plant revenues increased 12 percent to £199.3 million, with an eight percent rise in operating profits to £37.9 million. Group pre-tax profits for the period were 24 percent higher at £413.3 million. Net debt increased over 35 percent to £2.69 billion, partly due to the 11 bolt on acquisitions, capital expenditure, share buybacks and exchange rates. The Hewden acquisition came after these results.

In the second quarter group revenues increased 30 percent to £844.6 million, with a pre-tax profit of £242.3 million, up 33 percent on the same period last year. Utilisation across the entire fleet remained at last year’s level of 73 percent, capital expenditure fell slightly – less than two percent – to £683 million, with the company selling fewer used machines, thus increasing the overall fleet size. The average age of the fleet is now 26 months. Ashtead has tweaked its full year capital expenditure forecasts to a range of between £1 and 1.2 billion.

Chief executive, Geoff Drabble said: "The group delivered a strong quarter with reported rental revenue increasing 28 percent – 13% at constant exchange rates - for the six months and underlying pre-tax profit of £426 million. The underlying performance of the business continues to benefit from a clear and consistent strategy of organic growth supplemented by bolt-on acquisitions. In the six months, the reported results were positively impacted by weaker sterling (£53m) but this was partially offset by the impact of lower gains on fleet disposals (£14m) as we reduced our replacement capital expenditure.”

“I am pleased with the continued improvement in our margins - Group EBITDA margin is now a record 49 percent. These healthy margins and our strong balance sheet provide flexibility to continue to invest in our long-term structural growth opportunity and enhance returns to shareholders.”

“We continue to grow responsibly, adhering to the capital allocation priorities we have outlined. We have therefore invested £683 million by way of capital expenditure and a further £142 million on bolt-on acquisitions. With the continuing opportunity for profitable growth, we have increased our full year capital expenditure guidance. In addition, we spent £48 million under the share buyback programme and increased the interim dividend by 19 percent. All of this was achieved whilst maintaining leverage well within our stated range of 1.5 to 2.0 times net debt to EBITDA.”

“Both divisions continue to perform at the upper end of expectations. This, together with the benefit of significantly weaker sterling, means we expect full year results to be ahead of our expectations and the Board continues to look to the medium term with confidence."

Vertikal Comment

We have said it all before Ashtead has a winning combination at the moment and through steady organic and bolt on acquisitions is winning market share from others. In the UK A-Plant looks set to move ahead of its other large competitors who appear to be struggling in its wake.

A very positive and encouraging set of numbers.