Strong Ashtead outlook
17 September 2021
First quarter results announced yesterday from Ashtead Group, Sunbelt Rentals’ parent, show the business maintaining its robust performance, helped particularly in the UK by its ongoing government contracts related to combating Covid-19.
In the first quarter to 31 July, hire revenue increased by 22% with operating profit of $477m (£343m) [2020: $311m (£223.92m)]. Adjusted pre-tax profit was $437m (£315m) [2020: $260m (£187.20m)].
The Board now expects full-year results ahead of its earlier expectations.
Chief Executive, Brendan Horgan, commented: "The Group delivered a strong quarter with rental revenue up 22% over the prior year, but more importantly up 12% when compared with the first quarter of 2019/20, both at constant currency. This reflects continued market outperformance across the business.”
The UK business generated rental only revenue of £99m, up 24% on the prior year (2020: £80m). Total revenue increased 54% to £190m (2020: £123m) reflecting the higher level of ancillary and sales revenue associated with the work for the Department of Health in its Covid-19 response, which accounted for approximately 34% of UK revenue in the quarter.
Indeed, it was recently suggested here on the blog that the Government’s long-term commitment to testing, vaccination and booster delivery would create demand for hire equipment.
In the US, Ashtead’s rental only revenue of $1,102m (£793m) [2020: $953m (£686m)] was 16% higher than the prior year (and 7% higher than 2019). In the quarter, the general tool business grew 14%, from depressed activity levels in the prior year, while speciality businesses, which grew throughout last year, expanded 22%.
Ashtead also reports “sequential rate improvement since March in the US, in what is a better rate environment than we have seen for a number of years.”
Fleet deliveries were slower than expected due to supply chain delays and the Ashtead Group has deferred certain fleet disposals to meet strong demand. As a result, the average fleet age is now 41 months (2020: 38 months).
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