Sunbelt and A-Plant on the rise in latest quarter

Ashtead Group, which includes USA-based Sunbelt and A-Plant in the UK, continued its climb with record first quarter pre-tax profits of £99 million, up 59% on the same period last year.

Group revenue increased 26% to £411 million in the quarter, which ended 31 July. Sunbelt was the main driver of group performance. Its revenue grew 25% to US$479 million, thanks to a 17% increase in average fleet on rent and 6% improvement in yield.

Sunbelt's total revenue, including new and used equipment, merchandise and consumable sales, grew slightly less by 22% to $526 million as result of reduced used equipment sales.

A-Plant had a good quarter, delivering rental revenue growth of 35% to £61 million. Rental revenue growth excluding acquisitions was 12%, reflecting 9% more fleet on rent and a 3% improvement in yield.

Ashtead's chief executive, Geoff Drabble, said, “Our focus remains on organic growth with £279 million of capital expenditure in the first quarter. Whilst we continue to invest significantly in the business, our strong margins allow us to do this while delevering.

“As a result of this impressive performance, and with a strong balance sheet to support future growth, we now anticipate a full year result ahead of our previous expectations."

As a result of this investment, the group's rental fleet value at the end of the first quarter was £2.5 billion, with an average age of 29 months. Individually, Sunbelt's fleet size was $3.1 billion, up from $2.7 billion. This supported strong fleet on rent growth of 17% year-on-year. Average first quarter utilisation was 73%, up from 70% in the first quarter of 2012.

Sunbelt's strong revenue growth resulted in a record first quarter earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin of 46%, contributing to an operating profit of US$161 million, up from $114 million.

A-Plant's EBITDA margin improved to 31%, from 29%, and operating profit increased to £8 million from £3 million in the first quarter last year.

For the full year, expected gross capital expenditure is unchanged from £560 million and net capital expenditure, after disposal proceeds, of £470 million.

As expected, debt increased during the quarter to £1.187 billion, from £988 million, due to fleet investment, a number of small bolt-on acquisitions and the usual seasonal increase in working capital, said the company.