UK rental revenues down as uncertainty continues
By Murray Pollok13 August 2010
The UK's largest 75 equipment rental companies saw their revenues drop by 13% on average in the most recent financial year, and are unlikely to see a significant return to growth over the next 12 months, according to the annual Plant Hire Investment Report 2009/10 by Catherine Stratton.
The report - an authoritative analysis of the UK plant hire sector - calculates total rental revenues at the top 75 companies as £4.1 billion, 13% lower than the previous year. Over the same period, gross fleet values have reduced by just 3.5%, a fall described by the report as "surprisingly modest...we would anticipate a further steeper decline will be seen in next year's report."
Ms Stratton said rental companies were starting to become more optimistic after a period that was "the most difficult encountered by the sector of the past two decades". However, confidence remains fragile "and there remains the fear that this upturn will be very short lived as government's capital expenditure axe hovers over the construction sector".
She said that until the degree of spending cuts was known, it was difficult to predict the longer term outlook; "We do not expect any significant return to growth over the next twelve months and this is likely to lead to further rationalisation of both the construction and plant hire sectors."
The report provides enormous detail on the financial performance of the UK's largest rental companies, including analyses of trading and pre-tax profits, gross return on plant, debts, employee numbers and depreciation costs.
The median figure for gross return on plant (trading profits as a percentage of gross book value of the fleet) was 17% (compared to 19.5% in the previous year), although the number of the top 75 companies whose margin fell below 15% increased from 14 to 30.
Average trading profits for the top 75 companies was £17.3 million, 12% down on the previous year. Profits at the top 10 companies accounted for 75% of total top 75 profits. Average pre-tax profits were down 20% to £3.7 million, with 17 of the 75 making a loss.
• The Plant Hire Investment Report costs £499 (hard copy) or £899 (electronic copy). For details, see www.phir.co.uk