In the six months to 31st October 2018 A-Plant made an operating profit of 拢44.2m (2017: 拢46.8m) on revenue of 拢250.5m (2017: 拢245.1m). The operating margin therefore declined from 19.1% to 17.7%.
The revenue just from rental was up 5% to 拢191m (2017: 拢182m), driven by increased fleet on rent.聽 The dip in profits was attributed to the 鈥渃ompetitive rate environment鈥�.
This indicates that rates have been cut to maintain revenue growth.
However, parent company Ashtead鈥檚 North American business Sunbelt continues to do storming business, growing both organically and through acquisitions It generated first half revenue of 拢2.0bn and turned an operating profit of 拢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 拢610m (2017: 拢493m).
During the half-year, group capital expenditure for the first half was 拢1,063m gross and 拢963m net of disposal proceeds (2017: 拢708m gross and 拢649m net).
Ashtead invested 拢362m (2017: 拢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 拢62.0m from 拢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 拢4m on 1st November 2018, and Hoist-It, bought for 拢5m on 30th November (拢4m cash and 拢1m acquired debt).
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