Ashtead slows investment in A-Plant

Ashtead Group will shift the focus to efficiency and returns at its A-Plant business in the UK after several years of growth, and said the outlook for its fast-growing Sunbelt Rentals business in North America remained good.

Ashtead said UK rental rates remained competitive and that it would focus on increasing returns and operational efficiencies at A-Plant. That shift is reflected in its capital investment plans, with its entire projected £55-65 million spending on fleet for A-Plant in 2019/20 earmarked for replacement rather than growth. Overall, CapEx will be around 35% less in the UK in the current year.

In contrast, Ashtead will continue with heavy investment in Sunbelt in North American, with spending in the US this year reaching US$1.76-1.87 billion, including more than US$1 billion on growth expenditure alone.

A-Plant’s revenues for the year to 30 April were up 1% to £475 million, with operating profit down 11% at £62.3 million. At Sunbelt, total US revenues rose by 20% to US$4.99 billion, with operating profits up 19.5% to US$1.54 billion. Revenues at Sunbelt Canada increased by 54% to C$344 million.

Total group revenues were up 19% to £4.5 billion, and pre-tax profit was £1.1 billion.

Ashtead’s chief executive, Brendan Horgan, said; “The Group delivered a strong quarter with good performance across the business. As a result, Group rental revenue increased 18% for the year and underlying pre-tax profit increased 17% to £1,110m, both at constant exchange rates.

“We continue to experience strong end markets in North America and are executing well on our strategy of organic growth supplemented by targeted bolt-on acquisitions…Our business continues to perform well in supportive end markets.

“Looking forward, we anticipate a similar level of capital expenditure in 2019/20, consistent with our strategic plan. So, with our business performing well and a strong balance sheet to support our plans, the Board continues to look to the medium term with confidence.”