04.05.2008

United slips by 8%

United Rentals, the world’s largest rental company has reported a fall of 7.9 percent in total first quarter revenues to $772 million. Rental revenues actually edged up by almost one percent to $571 million, while sales of used and new equipment and services declined.

Pre tax profits increased by 18 percent to $59 million thanks to lower costs and the fact that the revenue shortfall was all from low margin sales activity. Rental rates declined by over half a percentage point while physical utilisation on a larger rental fleet edged up by 0.7 percent in comparison with last year.

The company has also reduced its full year revenue outlook from $3.7 billion to $3.4 to $3.5 billion with capital expenditure of $715 million.

Michael Kneeland, chief executive officer of United Rentals, said: "Our increased emphasis on equipment rental and cost containment is directly responsible for the record first quarter earnings that we reported today. We are committed to pursuing profitable rental volume, with the result that our employees were successful in increasing both rental revenue and time utilisation for the quarter despite the challenges faced in some of our end markets."

"In addition, we continued to target excess costs and reduced our SG&A expense by $16 million compared with last year. Our focus remains on making systemic improvements that will enable us to generate value in any external environment."

"We expect that the disciplined execution of our strategy will continue to benefit our 2008 results. Nevertheless, we concur with many construction industry experts and the experience of our own customers who see a slowdown in construction starts. This will constrain the demand for equipment as the year progresses. In light of the current operating environment, we have made a modest revision to our outlook. The board continues to review alternatives for enhancing shareholder value, taking account of the environment, our cash flow, capital structure and covenants."