Ashtead ups profit forecast after strong first half year
By Murray Pollok17 December 2012
Ashtead Group has increased its profit forecasts after a strong second quarter of the year. Both A-Plant and Sunbelt Rentals reported good revenue and profit growth for the three months to 31 October – Ashtead’s second quarter – with group revenues up 15.8% to £355.4 million and operating profits 41% higher at £88.3 million.
Sunbelt in the US reported a 16% increase in revenues to £301.5 million for the quarter and operating profits up 40% at £86.9 million, while A-Plant in the UK saw revenues 13.2% higher year on year at £53.9 million, with operating profits 46% up at £3.8 million.
The business is benefitting from the increased size of its fleet and, in the US, higher pricing. Ashtead has invested £341 million gross in the first six months of its financial year – a 35% increase on the same period last year – and it reported that Sunbelt had 10% more fleet on rent in the first half as well as a 5% improvement in yield.
In the UK, A-Plant’s fleet on rent grew by 9% in the six months, although this was offset by a 2% decline in yield, illustrating how competitive the UK plant hire market remains.
Fleet spending will be at a lower rate for the second half of Ashtead’s financial year, with the company anticipating gross capital expenditure for the full year of £500 million.
Ashtead's Chief Executive, Geoff Drabble, said; “Beyond the current financial year we remain well-placed to see growth over the medium term from either continued structural change or end market recovery.
“We are also generating high margins which, together with our much larger and younger fleet, results in an ability to fund significant growth whilst continuing to reduce leverage…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."
Ashtead said the strong performance in the second quarter had continued into November, with Sunbelt’s revenue being 26% ahead of the previous year, including work generated by the Hurricane Sandy disaster.