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Fri October 23 2020

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Rates squeeze holds back A-Plant

9 Dec 10 A squeeze on rates saw A-Plant's rental revenues fall 2% to £77m in the six months to 31 October, despite a 3% increase in fleet utilisation.

However, parent company Ashtead was able to report overall revenues up 9% to £245.2m for the period, thanks to a stronger performance from its larger US operation, Sunbelt.

Sunbelt made a first-half operating profit of £64.7m (2009: £49.3m) on revenues of £401.9m (2009: £355.4m).

A-Plant's operating profit rose to £4.2m from £3.1m last time.

Capital expenditure in the first half was increased to £96m (2009: £29m) of which £84m was rental fleet replacement with the balance spent principally on vehicles and property improvements.  Disposal proceeds were £24m (2009: £13m), giving net capital expenditure in the first half of £72m (2009: £16m).  The average age of the group's rental fleet at 31 October 2010 was 44 months (2009: 39 months), unchanged from year end.

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In the year to next April, Ashtead anticipates spending around £225m gross and £175m net of disposal proceeds, principally on fleet replacement.

Chief executive Geoff Drabble said: "In this, the second consecutive quarter in which we have delivered good profit growth, it was pleasing to see rental revenues accelerating with growth of 9% in the US.  In the UK there were improving trends throughout the first half and, whilst the UK market remains difficult, this was also encouraging.

“Clearly end markets remain fragile.  However, increased reliance on rental by our customers particularly in the US, together with continuing market share gains, is supporting our performance, a trend we expect to continue.

“As we enter the seasonally weaker winter period precise forecasting can be difficult.  However, the momentum we have established during the year has continued into November and will, we expect, be sufficient to ensure a full year outcome ahead of our earlier expectations." 

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