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City News: Hire remains buoyant Catherine Stratton, EHN’s financial analyst, reports that hirers continue to perform strongly despite the recent market turbulence. Unrest in financial markets looks set to continue. However, as our share price data table shows, hirers are still performing relatively well, with Vp hitting an all-time on 21 September. The sector has been bolstered by exceptionally strong half year results from Aggreko and good first quarter figures from Ashtead. The one piece of news that could have been interpreted negatively - the resignation of Neil O’Brien as Speedy Finance Director - produced little change in the share price. It is a sign of both the high regard in which he is held in the City, and the standing of Speedy, that the news was accepted with equanimity. Neil O’Brien has been in post for over eight years and has indicated that he will not leave the Group until a replacement has been appointed; in all probability he will remain until the end of Speedy’s financial year (31 March 2008). He has been at the financial helm during Speedy’s transition from a subsidiary to a quoted company, and its development into the largest hire company in the UK. He states that he has been contemplating a move for some time and felt that it was appropriate to reach the decision when he had seen through the Hewden Tools acquisition, the integration of which, he confirms, is going to plan. Sadly his expertise will now be lost to the hire industry. Speedy has commenced an external search for a successor and a long queue of applicants must be anticipated. Aggreko shares have held up exceptionally well and investors’ confidence was fully justified by the half year figures; growth was particularly strong in its International division where revenues grew by 55% to £166m and trading profits almost doubled to £34.7m; Europe also performed well with revenues advancing 30% to £76.7m and trading profits recovering to £5m, from £0.5m in the first half of 2006. The North American operations saw a 3.6% increase in revenues to £74.8m but a 9% decline in profits to £11.2m (a performance affected by the weakness of the dollar - in local currency terms revenues were up 14%). Chief Executive Rupert Soames stated that the GE Energy Rentals business acquired last December had been successfully integrated. He pointed out that many of the 90 countries in which Aggreko was now operating suffered from power shortages caused by demand outstripping supply and ageing infrastructure. He concluded: “Having consolidated our position as the world’s leading provider of temporary power, with over 4,000mW of generating capacity, Aggreko is well positioned to benefit from this growing demand.” STRONG ASHTEAD PERFORMANCE The first three months of its financial year have seen a strong performance from Ashtead as its US operation, Sunbelt, benefits from the NationsRent acquisition, and A-Plant‘s revenue growth continues to outpace the overall UK hire market. The UK subsidiary’s 6% growth is attributed to a 4% expansion in fleet size and a 2% increase in utilisation to a record 72% for the quarter. The company states that hire rates were “broadly unchanged.” Pro forma operating margins improved significantly to 13.5% from 9.8% in the same period last year. These advances have taken place during the period immediately following the store rationalisation programme at the end of the last financial year. A-Plant Chief Executive, Sat Dhaiwal, states that the store re-organisation is well underway and the company is expecting to complete on two new ‘super sites’ in Liverpool and Manchester before the end of November, with others in the pipeline. Two to three acres in size, the sites will offer both plant and tools. The national accounts side of A-Plant continues to prosper and currently accounts for 42% of revenues, with a number of tenders out at present. The company’s growth is, however, based on national and local trading; both aspects of the business continue to prosper, with utilisation currently at record levels in the mid 70s. OTHER NEWS IN BRIEF •Vp
In
his
AGM
statement,
Chairman
Jeremy
Pilkington
told
shareholders
that
the
Group’s
financial
year
had
started
strongly
with
“performance
comfortably
ahead
of
management
expectations
and
the
prior
year.”
The
recent
acquisitions
of
Cool
Customers
and
Executive Hire News › Archives › October 2007 › City News › Hire remains buoyant
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