Ashtead PLC, parent company to Sunbelt Rentals and United Kingdom rental company A-Plant, last week reported a 51 percent rise in profit before tax for its fiscal year ended April 30. Ashtead said underlying profit before tax was £122.9 million (about U.S. $241.5 million), exceeding analysts’ average forecast.
Ashtead also announced the sale of Ashtead Technology Rentals to a management-led buyout backed by Phoenix Equity Partners Ltd. for about £95.6 million in cash (see article below). The sale of the technology division will help Ashtead reduce debt largely incurred through its 2006 acquisition of NationsRent.
Total revenue for the Ashtead group for fiscal 2008, including its technology division, was about £1 billion (about U.S. $1.99 billion), a 12 percent year-over-year increase compared with £896.1 million in fiscal 2007. Underlying profit for taxation for the fiscal year was £197.7 million, a 31 percent increased compared with fiscal 2007.
Fiscal fourth quarter revenue was £241.9 million, a 3 percent increase from Q407’s total of £233.8 million.
For the year, Sunbelt’s underlying operating profit was about U.S. $658 million, a 21 percent year-over-year increase. A-Plant’s underlying profit jumped 48 percent to £30.2 million.
Ashtead said physical utilization in both businesses currently exceeds last year’s on a larger fleet.
“In the United States, in the first full year of our ownership of NationsRent, Sunbelt has delivered strong 21 percent growth in underlying operating profit and established a foundation for further improvement as the full benefits of the acquisition are realized,” said Ashtead chief executive Geoff Drabble. “In the U.K., A-Plant saw strong organic revenue growth and a tight control of infrastructure cost, delivering an excellent 46 percent improvement in underlying operating profit. The sale of Ashtead Technology for £96 million will allow us to continue to focus on the development of our core businesses and significantly reduce debt.”
Drabble added that the company expects the group to continue to trade in line with its expectations “despite the current economic uncertainty.”
The company said its focus regarding Sunbelt was establishing a cost-efficient infrastructure for profitable future growth.
“Total revenue remained broadly flat at $1.5 billion, due to our curtailment of the low margin sales of new equipment previously undertaken by NationsRent while rental and rental-related revenues grew 2 percent to $1.4 billion on a pro forma basis,” the company said in a statement. “Within this there were major regional variations, with areas of weakness such as the well-publicized challenges in Florida being more than offset by good growth elsewhere.”
The company added that with its enlarged national footprint, it will increasingly target larger regional and national accounts “where the profile of business is different from our historical mix. While this work tends to be at lower rates, rental periods are longer. This benefits margins by improving physical utilization and reducing transactional costs. We intend to continue this strategy of rebalancing our customer mix.”
Based in Fort Mills, S.C., Sunbelt Rentals is No. 4 on the RER 100.
