Sunbelt maintains overall strength
6 December 2022
Given the massively positive impact on demand and the operational scaling up to meet the equipment needs of the UK health department’s Covid-19 response, it was inevitable that the demobilisation of testing sites during the first quarter would affect Sunbelt Rentals’ UK revenues.
This is reflected in today’s interim and Q2 results from Sunbelt’s parent Ashtead Group for the period to 31 October. Indeed, such a readjustment was anticipated when the group announced record full-year results in June stating that approximately 30 per cent of UK revenue had derived from the Department of Health work in the prior 12 months.
In the US, however, the business continues its strong performance and overall Ashtead anticipates full-year results will be ahead of expectations.
The UK business generated rental only revenue of £215 million, up 6 per cent on the prior year (2021: £203 million). Excluding the impact of the work for the Department of Health, rental only revenue increased 21 per cent. Rental revenue increased 7 per cent to £293 million (2021: £272 million). Total revenue decreased 2 per cent to £361 million (2021: £368 million), reflecting the high level of ancillary and sales revenue associated with the Covid-related work, which accounted for approximately 8 per cent of revenue in the half year.
Ashtead chief executive Brendan Horgan says that this year will be one of transition for the UK business as it redeploys assets dedicated to the Department of Health testing centres elsewhere.
Ashtead uses the US dollar instead of sterling to present its Group results for clarity, given that approximately 80 per cent of revenue and around 90 per cent of operating profit originate in the currency.
Group revenue for the first half increased 23 per cent (26 per cent at constant currency) to $4,796 million or £4,283 million (2021: $3,884 million or £3,191 million). This resulted in adjusted profit before tax increasing 27 per cent to $1,243 million or £1,021 million (2021: $979 million or £804 million).
In the US, rental only revenue of $2,952 million or £2,425 million (2021: $2,342 million or £1,924 million) was 26 per cent higher than the prior year.
Focusing on the second quarter, group revenue increased 25 per cent (28 per cent at constant currency) to $2,537 million or £2,084 million (2021: $2,032 million or £1,669 million). Adjusted profit before tax for the quarter increased to $688 million or £565 million (2021: $542 million or £445 million). US rental only revenue in the quarter was 26 per cent higher than a year ago.
The UK generated rental only revenue in the quarter of £111 million (2021: £104 million), 7 per cent higher than the prior year. Total revenue increased 1 per cent to £180 million (2021: £178 million).
“Our business is performing well with clear momentum in robust end markets,” said Brendan Horgan. “We are in a position of strength and, with increased market clarity, have the operational flexibility to capitalise on the opportunities arising from the market and economic environment we face, including supply chain constraints, inflation and labour scarcity, all factors driving ongoing structural change. We now expect full year results ahead of our previous expectations and the Board looks to the future with confidence."
