09.09.2007

Ashtead gets off to a good start

The Ashtead group, owner of A-Plant in the UK and Sunbelt in North America, has reported first quarter revenues up 44 percent while profits before tax jumped by 350 percent.

The strong hike in pre tax profits reflects the fact that the company wrote off £15 million of exceptional costs in the first quarter of 2006, while this year there were no exceptionals. Looking at the result prior to the exceptionals shows an increase of over 26 percent.

A-Plant

A-Plant the UK rental business saw revenues rise by 19 percent, thanks to the addition of the Lux traffic business. In like-for-like comparison, revenue growth was six percent, while underlying operating profits jumped by 56 percent, or 45 percent on a like-for-like comparison.

The six percent growth was derived from: A four percent increase in average fleet size and a two percent increase in utilisation to a record 72 percent for the quarter, while rental rates remained roughly static.

Sunbelt

Revenues at Sunbelt jumped by 66 percent to $388.5 million, thanks to the addition of the Nations Rent acquisition. If first quarter revenues are compared to the last years combined Nations Rent and Sunbelt results, revenues actually fell by just over four percent.

The company says that the fall was due to the planned phasing out of low margin new equipment sales activity by Nations Rent and the reconfiguration of the acquired fleet towards products which give higher returns.

First quarter rental revenues edged up 0.2 percent to $362 million.
Pro forma dollar utilisation, which is measured on a rolling twelve months basis, was 63 percent at the end of July compared to 62 percent at the start of the financial year.

The newly combined fleet was on average three percent smaller than it would have been last year. First quarter time utilisation averaged 69 percent close to the 71 percent achieved by Sunbelt on its own in 2006.

Ashtead's chief executive, Geoff Drabble, said:
"We are pleased to report a strong performance in the first quarter as we continue to benefit from good market conditions in all three divisions. In Sunbelt we again delivered significant growth in pro forma margins and profits reflecting the integration cost savings and the progress made in driving growth in dollar utilisation1 at the acquired NationsRent stores.

A-Plant continues to progress based upon good revenue growth and the initial benefits from the profit centre rationalisation undertaken in the fourth quarter of last year.

We were also pleased to have delivered sufficient earnings improvement in the combined business to bring underlying earnings per share, calculated on a much larger equity base, to last year's level in only the third full quarter following the acquisition.

Despite the recent uncertainty in global equity and debt markets, the key economic indicators for our primary markets, US and UK non-residential construction, continue to indicate a favourable growth outlook. Current physical utilisation is also strong in both markets.”