Ashtead ups profit expectations after strong 2011/12

Ashtead Group said it expected to exceed its previous profit expectations for 2012/13 "with or without end market recovery". The company almost doubled operating profits for the year to 30 April 2012 on revenues up 21% at £1135 million.

Ashtead's US subsidiary, Sunbelt Rentals, remains the best performer, with revenues up 23% to US$1507 million and operating profits rising by 79% to $289.9 million.

Its much smaller UK business, A-Plant, also reported improved results, with revenues up 14% to £188.9 million and operating profits more than doubling from £2.7 million to £7.3 million.

For the year, Sunbelt saw a 13% increase on average fleet on rent and 7% increase in yield (relating to rental prices). At A-Plant, fleet on rent rose by 1% and there was a significant 6% increase in yield. The business as a whole saw a pre-tax return on investment of 12%, with Sunbelt at 14% and A-Plant still weak at 2.9%.

Ashtead's chief executive, Geoff Drabble, said he was delighted with the group's record profits that were "encouragingly delivered against a backdrop of end construction markets remaining at historically low levels."

He said the results demonstrated the success of its largely organic investment strategy and its ability to grow revenues and generate stronger margins through improved efficiency.

"The momentum we have established, and the flexibility provided by our strong balance sheet, allows us to anticipate further growth with or without end market recovery. As a result, it is likely that our profits in the coming year will be ahead of our previous expectations."

The company invested around £476 million gross during 2011/12, of which £426 million related to its rental fleet. Some of this had been brought forward from the current financial year, with forecast gross CapEx in the current financial year remaining high at around £450 million.