13.01.2008

United rentals upbeat

United Rentals has indicated that 2007 rental revenues will be up by 3.9 percent to $2.63 billion driven by a 2.5 percent increase in physical utilisation to 64 percent countered by a 1.1 percent fall in rental rates.

The company is also forecasting an increase of three percent in rental volume for 2008 to $2.7 billion, although it anticipates that total revenues will fall from $3.73 billion to $3.5 billion most likely driven by a drop off in sales of new and used equipment.

The company is budgeting to reduce its capital expenditure from the $970 million it spent in 2007, with an initial plan of $715 million for 2008.

United also expects full year 2007 earnings before interest and tax of $1.15 billion and free cash flow of $130 million to $150 million. The company expects 2008 margins to improve in percentage terms driven by higher rental utilisation.

Michael Kneeland, chief executive officer of United Rentals, said, "We remained strongly focused on our customers and our strategic objectives in 2007, despite a lengthy merger process. Our expected 2007 increase in EBITDA reflects the value of refocusing on our core business, managing our rental fleet for better returns, and implementing a number of cost-saving measures. Our 2008 outlook anticipates the continued success of this strategy recognising the limited growth expected in our primary end markets."

Shareholders will also have a one-off gain of 50 cents a share from the $100 million payout from Cerberus for walking out on its agreed take over of United.