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Higher ground for the hire sector

30 Nov 15 The UK’s top plant hirers are mostly well clear of the recession-era woes, though a few still have some problems to sort out, writes Will Mann

There is a healthier look about this year’s TCI Top 20 Plant Hirers league table. Collective turnover grew almost 14% to nearly £6bn, with profit-before-tax up 11.5% to over £900m. However, despite the generally positive trend, several big hitters – notably Aggreko and Speedy – had years they will want to forget. Top of the table, and by an increasing distance, is Ashtead. The firm’s revenue rose 24.7% to pass the £2bn mark for the first time, while profit grew at an even healthier rate of 32% to £473.8m.

Ashtead is such a familiar presence on the UK hire market that many readers may be surprised to discover that some 84% of Ashtead’s business is done by its US-based Sunbelt subsidiary, with only the remaining 16% accounted for by the UK arm, A-Plant. Ashtead looks set to cement its hold on the top position after spending over £1bn on its fleet and £236m on acquisitions – five in the UK – during 2014. “A-Plant continues to grow and is also taking market share,” said chief executive Geoff Drabble. “We believe we can increase our share of the UK rental market by 50%.”

Ashtead has cemented it's position at the top of the plant hire league table.
Ashtead has cemented it's position at the top of the plant hire league table.

Global generator specialist Aggreko had a difficult 2014, with revenue up a fraction at just over £1.5bn but profit down 13.2% to £289m. UK operations account for £192.2m of turnover.
Chairman Ken Hanna described the year as “challenging”, due to “significant management change, the mining sector’s decline in Australia, and adverse currency movements, largely in the US dollar.” Aggreko recruited a new CEO, Chris Weston, in January 2015 from Centrica.

RANK BY TURNOVER RANK BY PROFIT COMPANY LATEST RANK BY TURNOVER PREVIOUS TURNOVER BY PROFIT CHANGE (%) LATEST PRE-TAX PROFIT (£M) PREVIOUS PRE-TAX PROFIT (£M) CHANGE (%) LATEST MARGIN (%) PREVIOUS MARGIN (%)
1 1 Ashtead/A-Plant 2,038.9 1,634.7 24.7 473.8 356.5 32.9 23.2 21.8
2 2 Aggreko 1,577 1,573 0.3 289 333 -13.2 18.3 21.2
3 16 Speedy 375 349.7 7.2 2.1 7 -70 0.6 2
4 19 HSS 284.6 226.7 25.5 -8.5 2.6 -426.9 -3 1.1
5 3 Lavendon 246.3 237.5 3.7 34.1 30 13.7 13.8 12.6
6 7 Select 211.2 194.8 8.4 13.2 11.2 17.9 6.3 5.7
7 4 VP 205.6 183.1 12.3 26.8 20.1 33.3 13 11
8 5 Gap 143.3 118.4 21 18.6 13.5 37.8 13 11.4
9 17 Deborah Services 124 76.8 61.5 2.1 1.5 40 1.7 2
10 6 Ainscough 116.2 109.4 6.2 16.6 10.4 59.6 14.3 9.5
11 20 Hewden Stuart 105.9 109.2 -3 -16.6 -13 27.7 -15.7 -11.9
12 18 Brand Energy & Infastructure Services 80.1 61.9 29.4 -2.6 -13.6 80.9 -3.2 -22
13 11 Amey Fleet Services 77.8 54.5 42.8 8.5 11.9 -28.6 10.9 21.8
14 14 Brandon 76.2 69.5 9.6 7 6.2 12.9 9.2 8.9
15 10 Generation 69 46.3 49 9.5 5.2 82.7 13.8 11.2
16 8 Andrews Sykes 56.4 61.1 -7.7 11.8 15 -21.3 20.9 24.5
17 9 Selwood 51.4 56.2 -8.5 10.8 11.3 -4.4 21 20.1
18 13 CW Plant 47 19.7 138.6 7.2 2.5 188 15.3 12.7
19 15 L Lynch 44.2 35.4 24.9 4.1 2.4 70.8 9.3 6.8
20 12 Mabey Hire 44.1 37.7 17 8.5 6.7 26.9 19.3 17.8
    TOTALS 5,930.1 5,217.9 13.6 907.5 813.7 11.5 15.3 15.6

Speedy Hire is another big name with problems. Revenue grew 7.2% to £375m but profit dropped to £2m, a margin of just 0.5%. The firm’s woes have been widely reported: it withdrew from the Middle East in 2014 following discovery of an accounting fraud which led to the resignation of chief executive Steve Corcoran. But Mark Rogerson, the man brought in to tidy up the mess, departed in July this year, after only 18 months in post, following a profit warning. A board review uncovered poor customer service during a “network optimisation programme”, with SMEs neglected while Speedy concentrated on big strategic accounts.

New executive chairman Jan Astrand said: “Remedial action programmes have not been delivered as needed. Our immediate priority is to accelerate the execution of those programmes and increase our focus on the SME core hire market.” HSS floated on the London Stock Exchange in February, but started life as a plc by posting an £8.5m loss despite growing turnover by 25% to £284.6m. The situation worsened with a loss of £14.1m reported for the first half of 2015.

Mitigating circumstances are the costs associated with an aggressive expansion strategy, which has included the acquisitions of Apex Generators and portable variable messaging sign business MTS, and the opening of 50 new local branches. The stock exchange listing and fleet depreciation added £3m of exceptional charges. Chief executive Chris Davies, who has been succeeded by chief operating officer John Gill, warned that “trading continues to be unpredictable”.

Access specialist Lavendon, which trades in the UK as Nationwide, was third in the table for profitability, with a healthy £34.1m. Just over half its 20,000-strong fleet is UK-based. Laing O’Rourke’s plant hire subsidiary, Select, posted steady growth in revenue, up 8.4% to £211.2m, and profit, which rose 17.9% to £13.2m. VP’s profit also rose - by one-third to £26.8m on turnover of £205.6m.

Gap enjoyed a 37.8% rise in profit to £18.6m on increased revenue of £143.3m. The small-plant and tool hire specialist launched three new divisions in 2014 – providing safety, welfare and event services – and chairman Danny O’Neil said it was “extremely satisfying that these emerging divisions contributed 16% of our profits”. The firm has an ambitious five-year expansion plan, increasing its borrowing capacity to £220m, and acquiring more than 5,500 items of plant and equipment from Kier earlier this year.

Scaffolding specialist Deborah Services posted record revenue of £124m after a big turnover jump of 61.5%. Director Liam Spring said the firm was “confident” about future growth, investing £8.1m in new equipment and acquiring utility outfit PDC. The highest turnover increase was reported by Charles Wilson Engineers, trading as CW Plant, where revenue more than doubled from £19.7m to £47m. Amey Fleet Services and Generation also enjoyed big revenue spikes, to £77.8m and £56.4m respectively. Besides HSS, the only other hirers to dip into the red this year were Hewden and Brand Energy & Infrastructure Services (BEIS).

CW Plant more than doubled it's revenue last year.
CW Plant more than doubled it's revenue last year.

Hewden, in its annual report, did not provide detail on its £16.6m loss but director Adrian Murphy said the firm “expects improvement... during 2015 due to operational efficiencies now being delivered and one-off issues in 2014 not recurring”. BEIS, which bought Harsco Infrastructure’s trade, assets and some liabilities in 2013, posted a £2.6m loss in a 13-month trading period since the acquisition. However, revenue was up 29.4% to £80.1m and director Ian Farrell said the new business had “performed strongly” with “improved project cost control, greater efficiencies and a more effective organisational structure”.

This article first appeared in the November 2015 issue of The Construction Index magazine. To read the full magazine online, click here.

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