Rental revenues up at Ashtead

Ashtead Group, the parent company of UK-based A-Plant and US-based Sunbelt, has reported a 17% year-on-year increase in rental revenues for the 12 months to 30 April, 2016, to £2.26 billion (€2.86 billion).

Total revenues were up 19% year-on-year to £2.55 billion (€3.2 billion), while gross profit increased 24% to £617 million (€780 million).

Sunbelt again contributed the bulk of the company’s revenues, posting a total of £2.18 billion (€2.75 million) for the 12 month period, compared to £1.72 billion (€2.17 billion) for the previous fiscal year.

Ashtead said US markets were up around 6% during the year, and were forecast to grow again this financial year. In addition, bolt-on acquisitions and greenfield openings also contributed to growth as the company expanded its geographic footprint and its specialty businesses.

Sunbelt opened 58 new sites during the year, up from 31 in the previous financial year, and spent US$81 million (€71 million) on acquisitions in the US and Canada, adding a further 10 locations.

Sunbelt’s average utilisation was stable year-on-year at 70%, while the company said it sold more used equipment than last year. It said this reflected higher replacement capital expenditure and was also a response to the downturn in oil and gas markets.

On the other side of the Atlantic, meanwhile, A-Plant’s revenues for the 12 months stood at £365 million (€461 million), up from £323 million (€408 million) for the 12 months to 30 April, 2015, amid competitive markets.

Capital expenditure

The company said it was now entering a very different phase of replacement expenditure as it lapped its low capital expenditure years of 2009, 2010 and 2011. Therefore, it said that its replacement spend would be much lower in 2016/17 than in recent years.

However, Ashtead said it continued to expect strong capital expenditure growth generating double digit fleet growth. It said it had a broad range for 2016/17 capital expenditure of between £700 million (€884 million) to £1 billion (€1.3 billion).

Chief executive Geoff Drabble said, “We have broadened both our geographic footprint and the markets we serve and the benefits of this diversification are evident, both in our financial performance and our market share gains.

“Particularly encouraging is the continued improvement in our margins, with Group EBITDA margins now a record 46%. These strong margins, together with the natural moderation of our replacement fleet expenditure, mean we are entering a phase where we anticipate both good earnings growth and significant free cash flow generation.

“We therefore have the flexibility to continue both to invest in our long-term structural growth opportunity and enhance returns to shareholders.

“We have seen a good seasonal upward trend in fleet on rent throughout the spring which has continued into the new financial year. Our end markets remain strong, the structural drivers are still in place and we have a strong balance sheet which allows us to execute our plans responsibly. As a consequence, the Board continues to look to the medium term with confidence."