Ashtead says Sunbelt benefiting from 'structural shift to rental'
By Murray Pollok17 June 2011
Ashtead Group said it is benefiting from "a structural shift to rental" in North America and is seeing improvements in utilisation rates and pricing.
The company reported fourth quarter revenue growth of 11% to £242.8 million, with Sunbelt Rentals in North America growing by 21% and A-Plant in the UK by 6%. Operating profit for the quarter rose by 35% to £18.2 million.
Sunbelt's utilisation rates grew by 6% compared to the same quarter in 2010 and yield, which reflects pricing, was up 6%. At A-Plant, growth was the result of 4% yield growth and 2% increases in utilisation.
Ashtead's chief executive, Geoff Drabble, said the results were encouraging, with Sunbelt in particular establishing a good momentum; "Against a backdrop of still challenging end construction markets we are clearly benefiting from both the structural change in the US rental market and self help from the programmes we initiated during the downturn."
Mr Drabble said Ashtead remained cautious about the outlook for its end construction markets in the short term, particularly in the UK.
The company has already started to increase investment in its fleet. It invested £225 million gross in the year to 30 April, up from £63 million in the previous year, and expects to spend £325 million in the year to April 2012. Much of this will be spent on Sunbelt's fleet, which Ashtead expects to grow by between 1% and 3%.
Ashtead's full year revenues grew by 11% to £948.5 million, with operating profits up 41% to £283.8 million.