Robust nine months for Sunbelt

By Euan Youdale02 March 2021

Ashtead Group, the parent company of Sunbelt Rentals, has reported a fall in rental revenues of -3% to £3,375 million ($4,705 million) in the nine months of its current financial year.

In the UK, total revenues for the nine months increased by 22%, fueled by Covid-related work for the Department of Health, including sales of equipment. Business with the health department accounted for a quarter of Sunbelt UK’s revenues in the priod.

Sales in the US were 6% down year-on-year and 5% lower on rental revenues only, which Ashtead said represented a “strong market ourperformance”. It’s specialty rental businesses grew by 10% in the period.

Sunbelt Rentals (4)

Including all group activities, revenue fell by -2% to £3,760 million ($4,705 million), compared to the same period in its 2019/2020 financial year. However, the nine-month period, which ended 31 January, saw a sharper drop in operating profit of -17% to £871 million ($1,214), compared to the same period in the previous financial year.

In the third quarter alone, rental revenue was down just 1% at £1,077 million ($1501 million), while operating profit was again hit harder at -11% to £257 million ($358 million).

Growth over the nine months varied significantly across Ashtead’s geographical markets and correlated with the severity of Covid-19 infection rates and associated restrictions, said the company. Nevertheless, activity levels increased consistently during the period, with fleet on rent now broadly in line with the previous year in the US, slightly behind in Canada, due to the recent lockdown in Ontario, and higher in the UK.

As a result, nine month rental revenue in the US was -5% lower than last year, while the general tool business was -7% lower (-4% lower third quarter), and the specialty businesses benefitted from a broader range of products and end markets with rental revenue 10% higher.

The group added that capital expenditure for the year was expected to meet the upper end of its previous guidance at £700 million ($975 million). Looking ahead to 2021/2022 the company forecasts a return to growth with a total capex of £1.3 billion ($1.8 billion) - £1.5 billion ($2.1) for the 12 months and revenue reaching mid-single to double digit growth in the US.

Ashtead’s chief executive, Brendan Horgan, said one of the company biggest achievements was that it had not made any team members redundant as a result of Covid-19 and had not sought assistance from government support programmes, such as the UK’s Coronavirus Job Retention Scheme or similar schemes in Canada. Furthermore, the company made additional discretionary payments to its skilled trade workforce.

“This performance illustrates the successful execution of our long-term strategy, which we embarked upon after the last recession, to broaden and diversify our end markets and strengthen our balance sheet.

“This has enabled us to capitalise on our increasing scale while, at the same time, maintaining the business’ agility. This has been demonstrated over the last year as the Group has responded to the challenges arising as a result of the pandemic.”

Horgan added, “The strength of our business model and balance sheet positions the group well in markets that are likely to remain uncertain. With our businesses performing well, we now expect full year results ahead of our previous expectations. The benefit we derive from the diversity of our products, services and end markets, coupled with ongoing structural change, enables the Board to look to the future with confidence.”

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