United Kingdom-based international rental giant Ashtead Group, which also owns Sunbelt Rentals, met fiscal third-quarter profit forecasts with profit before tax, goodwill and one-off items rose 82 percent to £20.8 million (about U.S. $41.3 million) for the three-month period ended Jan. 31.
Sunbelt’s operating profit margin grew 19 percent in the quarter, from $58.1 million in the previous year’s third quarter to $69.4 million this year. In the past nine months, Sunbelt’s operating profit grew 38 percent from $193.3 million last year to $266 million in this year’s third quarter.
Rental and rental-related revenues grew 1.6 percent in the quarter to $338 million, and grew 1.3 percent in the nine months to $1.1 billion.
Dollar utilization was 63 percent at the end of January, compared to a pro forma (Sunbelt and NationsRent combined) percentage of 62 percent for the previous year’s nine-month period. Rental rates declined 0.5 percent in the nine-month span. The company expects rental rates to return to being broadly flat on a year-over-year basis as the busier summer months approach.
“Our three divisions have all continued to perform well in the third quarter,” said Ashtead chief executive Geoff Drabble. “In the U.S., where our principal markets remain strong, we again increased margins as we continue to drive efficiencies from the enlarged Sunbelt business. At A-Plant, the 49-percent growth in its year-to-date operating profit is a clear indication of the momentum this business has developed and its good position in the U.K. market.”
Drabble remained confident in A-Plant, Ashtead’s U.K. hire business as well as Sunbelt Rentals. “Despite the economic uncertainty, our markets in the U.S. and the U.K. remain good and our experience on the ground suggests that this will continue for the foreseeable future. In the event of changing markets, we have a flexible business model that is able to respond quickly and effectively to market conditions.”
The company said it expects to reduce capital expenditures in the next year, spending about £220 million (about U.S. $430 million). The company said about £180 million would be spent on replacement fleet, with about £40 million to be spent on growth capex.
Sunbelt Rentals is based in Fort Mill, S.C., and is No. 2 on the RER 100. Ashtead Group is based in Leatherhead, Surrey, England.