13.06.2017

Another record year for Ashtead

Ashtead, owner of Sunbelt in the USA and A-Plant in the UK has published its full results for the year to the end of April.

Total revenues were more than 10 percent higher at £3.2 billion while pre-tax profits improved at a slightly slower rate of eight percent to £765.1 million.

Sunbelt revenues in dollars were $3.58 billion nine percent higher than in the previous year – although rental revenues were 12 percent higher, but used equipment sales were lower as the company reduced capital expenditure, with the average age of the fleet rising from 25 to 29 months. Operating profits were seven percent higher at $109 million. Utilisation was one percent up on the year at 71 percent.

A-Plant revenues were 15 percent higher at £418.2 million, thanks to both organic growth and acquisitions. Operating profits were also seven percent higher at £71.6 million.

Looking at the fourth quarter, group revenues improved 11 percent to £830.6 million with pre-tax profits up five percent to £180.6 million. A-Plant revenues were almost 16 percent higher at £116.5 million, with operating profits flat of £18.8 million. Sunbelt revenues for the quarter were almost 11 percent higher $893 million with operating profits of $241 million, six percent up on the year.

Capital expenditure for the full year was £1.09 million, down from £1.24 million the year before, this resulted in lower used equipment sales, and slightly older fleet at the end of the year. Net debt at the end of April was £2.53 billion, up from just over £2 billion at the end of last year. this after spending £421 on acquisitions.

Chief executive Geoff Drabble said: "I am delighted to be able to report another very successful year for Ashtead with group rental revenue increasing 28 percent and underlying pre-tax profit increasing to £793 million. The reported results were impacted favourably by weaker sterling but, with 13 percent growth in group rental revenue at constant exchange rates, we have good momentum.”

“Our end markets remain strong and, most importantly, we continue to see structural change as our customers increasingly rely on the flexibility of rental. We continue to execute well on our strategy to support these changes through a combination of organic growth and bolt-on acquisitions. We made significant investments in the year, spending £1.1billion in capital expenditure and £437 million on bolt-on acquisitions. In addition, we spent a further £48 million on share buybacks in line with our capital allocation priorities.”

“Looking forward, our markets remain good and spring has seen a good seasonal uplift in fleet on rent, with record levels of physical utilisation for this time of year. We expect a similar level of capital expenditure in 2017/18, consistent with our 2021 strategic plan. A number of the investments we made were in the seasonally quieter second half of the year and we incurred one-off costs associated with acquisition and integration. Now that this work is behind us, we anticipate seeing the full benefit of these investments in the coming year.”

Vertikal Comment

Another excellent set of numbers from Ashtead as it continues to outpace the market both in North America and the UK. Its UK business A-Plant has now surged forward to become the UK’s largest equipment rental company, leaving both Speedy and HSS in its distant wake. With a number of acquisitions yet to make a full year contribution, this gap is almost certain to widen in the year ahead. The latest acquisition of Plantfinder – earlier this month - for £24 million will also help of course

One note of caution is the slip in profit growth, although this does look to be more due to a combination of lower used equipment sales and the timing of some of the acquisitions. There is no reason to doubt that this will bounce back in the current year. Both companies - Sunbelt and A-Plant are in a confident mood and likely to have an exceptional year in 2017/2018.