In the six months to 31st October 2018 A-Plant made an operating profit of £44.2m (2017: £46.8m) on revenue of £250.5m (2017: £245.1m). The operating margin therefore declined from 19.1% to 17.7%.
The revenue just from rental was up 5% to £191m (2017: £182m), driven by increased fleet on rent. The dip in profits was attributed to the “competitive rate environment”.
This indicates that rates have been cut to maintain revenue growth.
However, parent company Ashtead’s North American business Sunbelt continues to do storming business, growing both organically and through acquisitions It generated first half revenue of £2.0bn and turned an operating profit of £666m. Most of this was form the USA, but the nascent Sunbelt Canada business is growing quickly.
As a result, Ashtead Group rental revenue increased 18% for the six months and pre-tax profit increased 25% to £610m (2017: £493m).
During the half-year, group capital expenditure for the first half was £1,063m gross and £963m net of disposal proceeds (2017: £708m gross and £649m net).
Ashtead invested £362m (2017: £298m), including acquired debt, in 12 bolt-on acquisitions during the period.
However, A-Plant reduced its fleet investment significantly, with capital expenditure dropping to £62.0m from £87.3m during the same period last year. That is a 29% reduction.
Since the end of October A-Plant has acquired Precision Geomatics, a survey equipment hire business bought for £4m on 1st November 2018, and Hoist-It, bought for £5m on 30th November (£4m cash and £1m acquired debt).