Ashtead says rental volumes holding but rates deteriorate

Ashtead Group said rental revenues in its fourth quarter to 30 April will be around 24% down (at constant exchange rates) with volumes holding up "relatively well" but rental rates deteriorating worse than anticipated.

In its trading update, the owner of US rental company Sunbelt Rentals and the UK's A-Plant said it expected pre-tax profits for the year to 30 April to be within the current forecast range, but that downward trends in rental rates and revenues mean that profits in fiscal 2009/10 are likely to fall below earlier estimates.

"Construction markets in the UK and US are, as anticipated, weaker with private sector projects particularly impacted by the shortage of funding", said the company, "Rental volumes have, however, held up relatively well and are broadly in line with our expectations."

Ashtead said is was well-positioned to benefit from major government based infrastructure projects and claimed it was "gaining market share in our core markets."

Meanwhile, Ashtead said the cost reduction programme announced in December - involving depot closures, staff reductions and fleet disposals - was now substantially complete and had cut annual costs by around £100 million. The company has taken a £75 million one-off charge in delivering these savings.

Ashtead said it remained highly confident in its long term strength; "With long term committed finances and effectively no earnings based covenants to adhere to Ashtead has the financial flexibility and balance sheet strength to cope with current conditions. This flexibility and strength, coupled with its strong positions in both the US and UK rental markets, mean that the Group is well placed for the future."

The company reports its results for the year ended 30 April 2009 on Thursday 18 June.