United Rentals results down

By Patrick Hill01 August 2008

US equipment rental company United Rentals Inc. reported a 44.8% fall in profits to $37 million in the second quarter of 2008. Profit in the first half of the year was $75 million, 24.2% less than the $99 million in the same period of 2007.

Second quarter 2008 rental revenue was $621 million, 5.8% less than the $659 million of that quarter in 2007. Rental revenue for the first half of this year was $1.192 billion, down 2.7% from $1.226 billion in the first half of 2007. The company said the quarter's revenue decline was because of 1.4% lower rental rates and a 0.8% decline in time utilization.

Total revenues for the quarter were $831 million, down 13.6% from $962 million in 2007, and total half-year revenue in 2008 of $1.603 billion fell 10.9% from $1.800 billion in 2007. The Greenwich, Connecticut-based company said these declines reflected a fall in sales of contractor supplies, planned as part of its strategy to focus on the core rental business.

Michael Kneeland, chief executive officer, said, "Our second quarter performance reflects the impact of expected market weakness on our core rental business, counteracted in part by the proactive implementation of our profit improvement strategy. Although our rental revenue declined, we drove our EBITDA [earnings before interest, tax, depreciation and amortisation] margin higher through rigorous reduction of workforce and facility costs..."

Rental fleet size, measured in original equipment cost, was $4.3 billion at 30 June 2008, and average age of the fleet was 38 months. Those figures compare to $4.2 billion and 38 months at the end of 2007 and $4.2 billion and 37 months at the end of June 2007. The company said the number of units in the fleet is essentially the same in June as at year-end 2007.

United said it expects total 2008 revenue to be $3.3 to 3.4 billion and pro-form EBITDA to be $1.15 to 1.17 billion.

The company's second quarter and first half performances were losses on a per share, GAAP (generally accepted accounting) basis because of a $239 million preferred stock redemption charge.

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