Ashtead gets profit boost on strong 2013 results

Ashtead Group expects profits in the coming year to be ahead of expectations as the business continues to benefit from “strong momentum [and a] cyclical recovery still to come.”

Sunbelt Rentals in the US continues to be the strong performer, with rental revenues in the fourth quarter to 30 April up 23% and up 21% over the full year, driven by a larger fleet on rent and improving prices. Operating profits at Sunbelt for the year were up 56% to US$453 million on revenues of $1820 million.

Its UK business, A-Plant, saw more modest growth, with revenues for the final quarter up 11% to £52.7 million, and operating profits almost doubling to £2.6 million. Revenues for the year were up 9% to £206.1 million, with operating profits nearly double at £10.3 million.

A-Plant’s revenue growth was the result of an 11% increase in fleet on rent, offset by a 2% decline in yields. Ashtead said A-Plant performed well in difficult market conditions.

Ashtead's chief executive, Geoff Drabble, said the results were excellent; “Our largely organic investment strategy has again delivered strong revenue growth together with margin and return on investment improvement.

“We continue to make significant investment in the business with capital expenditure of £580m in the year and a similar level planned for the coming year. As a result of our strong margins, we are able to support this investment while at the same time continuing to delever.

“With this momentum established in the business, cyclical recovery still to come and a strong balance sheet to support growth opportunities, we anticipate that our profits in the coming year will be ahead of our earlier expectations."

Total group revenues for the year were £1.362 billion, up by 19% compared to 2012, with operating profits up 58% to £290.3 million.

Ashtead spent £521 million gross on its fleet last year and said capital expenditure would reach around £560 million in the current financial year to April 2014. In its financial statement, the company said; “This level of expenditure is consistent with our strategy at this stage of the cycle of investing in organic growth, opening Greenfield sites and continuing to reduce our leverage.”