Price rises push up revenue at Ashtead Group
By Murray Pollok09 March 2011
Rental prices are showing signs of starting to increase at Ashtead Group's US and UK rental businesses, helping increase group revenues by 15% year on year in the third quarter to 31 January.
Ashtead said that based on its third quarter performance it was likely that its full year results will exceed its earlier forecast.
Yield, which is Ashtead's measure of changes in revenue related to pricing and items such as delivery charges, grew by 5% in the third quarter for Sunbelt and by 1% at A-Plant. Yields have now grown at Sunbelt for three quarters in a row, while the positive yield at A-Plant was the first after 13 quarters of decline.
Sunbelt's third quarter revenues grew by 11% to £182.6 million and operating profits in the period were more than two and a half times higher at £18.3 million. At A-Plant, revenues in the quarter grew by 2% to £38.8, with an operating loss of £1.3 million, which was down from £1.3 million in the same quarter in the previous year.
Ashtead's chief executive, Geoff Drabble, said he was encouraged by the improving trends in the third quarter during its most difficult seasonal period; "Our high levels of fleet on rent and our continued focus on yield and costs have produced strong results for the first nine months with profits now £20 million ahead of last year.
"Whilst we remain cautious about predicting short term recoveries in end construction markets, the momentum we have established in difficult conditions reinforces the Board's long held confidence in the medium term attractiveness of our rental markets."
The group reported nine month revenues up 8% to £705.7 million and operating profits up 42% to £80.6 million. Pre-tax profits rose from £8.1 million to £28.3 million.
Capital expenditure in the nine months was £129 million (compared to £35 million in the same nine months of the previous financial year), of which £113 million was on rental fleet replacement. Ashtead said it expected to invest around £225 million gross for the full year, £175 million net of disposal proceeds.