Ashtead revenues steady; closes 50 Sunbelt stores at Lowes

Ashtead Group reported a 2% increase in revenues to £239.1 million, constant currency adjusted, with both Sunbelt Rentals in the US and A-Plant in the UK reporting improved profits.

The company announced that it has closed 50 "underperforming" Sunbelt stores located at Lowes builders merchants/DIY stores in the US. Forty Sunbelt depots remain at Lowes stores.

Sunbelt revenues grew by 3%, with rental revenues up 1% to US$271 million, and operating profits up 13.6% to$44.2 million. A-Plant saw total revenues fall 7% to £39.7 million, with operating profits almost doubling to £2.0 million. Pre-tax profit for the quarter grew by 35% to £11.9 million.

The decision to close 50 of the 90 Sunbelt rental locations at US Lowes stores in July was taken - with the agreement of Lowes - because they were underperforming. Lowes has agreed to extend the lease for the remaining 40 locations until October 2012. Revenues from the Lowes branches were "not significant to Sunbelt's overall performance", said Ashtead.

Ashtead said the results in the US reflected "gradually improving conditions", while A-Plant's smaller revenues reflected a 7% fall in yield, which was the result of lower prices negotiated last Autumn with key accounts who represent around 50% of A-Plant's revenues.

Ashtead's chief executive, Geoff Drabble, said; "We are pleased to announce good Group profit growth for the first quarter, reflecting an improvement in both divisions.

"Whilst end markets remain fragile, our strong performance in fleet on rent reflects the impact of the responsible correction in fleet sizes throughout the rental industry and increased outsourcing by customers, a trend we expect to continue."

Ashtead said it would spend £225 million gross during the current fiscal year (which ends on 30 April 2011), mainly for fleet replacement.