Ashtead plans big CapEx increases as outlook improves
By Murray Pollok17 June 2010
Ashtead said the quarter to 30 April showed early signs of market improvement, particularly in the US, although the outlook in the UK is less positive because of uncertainty over public sector spending cuts.
The company reported a 3% fall in group revenues to £210 million for the quarter, with operating profits rising from £12 million to £15 million. Revenues at Sunbelt Rentals in the US fell by 3% to US$259 million with operating profits of US$24 million. A-Plant's revenues in the UK fell by 4% to £41 million with an operating profit of £1 million.
Full year revenues at the company were £837 million, down 25% on the previous year. Operating profit was down 58% to £68 million.
The improved outlook and the need to refresh its fleet has prompted Ashtead to plan significantly more capital investment in the current finacial year, to 30 April 2011. Compared to gross CapEx of around £57 million last year, the company said it will invest US$275 million in the US and £25 million in the UK, largely for replacement.
Ashtead's chief executive, Geoff Drabble, said; "Although market conditions remain difficult we are pleased to have seen some early signs of improvement in Q4, particularly in the US.
"In the US we continue to believe that we will see stabilisation in markets in the current year with improving trends through 2011. In the UK, whilst current
markets are also stabilising, uncertainty around the impact of public sector spending cuts makes the medium term less certain."
Ashtead said in its financial results that the group's performance had been encouraging, but said that "construction markets remain fragile and we anticipate only moderate recovery in the US before 2011. In the UK, current activity levels remain stable due to committed infrastructure spend, particularly in utilities, but the medium term outlook is less certain."