Ashtead ups 2013 investment as US growth continues
By Murray Pollok06 March 2013
Ashtead Group has increased its profit forecast for the year and brought forward fleet investment plans after reporting strong growth in its US rental business in the three months to 31 January.
The company said it would bring forward US$100 million of fleet expenditure originally earmarked for fiscal year 2014 to the final quarter of this year (the three months to 30 April).
Group revenue grew 26% to £333.9 million for the third quarter with operating profits almost doubling to £64.2 million. Both Sunbelt Rentals in the US and A-Plant in the UK reported double-digit revenue growth in the third quarter.
The good performance continues to be driven by Sunbelt where rental revenues in the quarter grew 25% to £284 million. Business related to Hurricane Sandy contributed around 5% (US$15m) of the growth, although Ashtead said the impact of this would not be carried on into the fourth quarter. In the first nine months of the year Sunbelt had 11% more equipment on rent and reported a 7% increase in yield (which relates to rental prices).
At A-Plant in the UK rental revenues grew 11% to £49.8 million, with operating profits of £1.3 million, compared to a small loss in the same quarter of 2012. The 9% revenue growth for the first nine months of the year was driven by 10% growth in average fleet on rent, offset by a 2% yield decline.
The company said capital expenditure would be around £550 million for the current fiscal year ending 30 April. It anticipates expenditure of £525 million in its 2014 fiscal year, which starts in May, but with a greater proportion directed towards growth rather than replacement.
Ashtead's chief executive, Geoff Drabble, said; “It is pleasing to report another quarter where strong revenue growth and ongoing operational efficiency have delivered record nine month profits of £194 million.
“With this momentum clearly established in the business, we now anticipate a full year profit ahead of our earlier expectations…With a broad range of metrics already at record levels at this stage in the cycle, together with a strong balance sheet to support medium term growth opportunities, the board looks forward with confidence."