Ashtead slows investment in A-Plant

By Murray Pollok19 June 2019

Ashtead Group will shift the focus to efficiency and returns at its A-Plant business in the UK after several years of growth, and said the outlook for its fast-growing Sunbelt Rentals business in North America remained good.

Ashtead said UK rental rates remained competitive and that it would focus on increasing returns and operational efficiencies at A-Plant. That shift is reflected in its capital investment plans, with its entire projected £55-65 million spending on fleet for A-Plant in 2019/20 earmarked for replacement rather than growth. Overall, CapEx will be around 35% less in the UK in the current year.

Ashtead logo

In contrast, Ashtead will continue with heavy investment in Sunbelt in North American, with spending in the US this year reaching US$1.76-1.87 billion, including more than US$1 billion on growth expenditure alone.

A-Plant’s revenues for the year to 30 April were up 1% to £475 million, with operating profit down 11% at £62.3 million. At Sunbelt, total US revenues rose by 20% to US$4.99 billion, with operating profits up 19.5% to US$1.54 billion. Revenues at Sunbelt Canada increased by 54% to C$344 million.

Total group revenues were up 19% to £4.5 billion, and pre-tax profit was £1.1 billion.

Ashtead’s chief executive, Brendan Horgan, said; “The Group delivered a strong quarter with good performance across the business. As a result, Group rental revenue increased 18% for the year and underlying pre-tax profit increased 17% to £1,110m, both at constant exchange rates.

“We continue to experience strong end markets in North America and are executing well on our strategy of organic growth supplemented by targeted bolt-on acquisitions…Our business continues to perform well in supportive end markets.

“Looking forward, we anticipate a similar level of capital expenditure in 2019/20, consistent with our strategic plan. So, with our business performing well and a strong balance sheet to support our plans, the Board continues to look to the medium term with confidence.”

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