 Significant cost savings for Ashtead |
Ashtead Group can look forward to a year of significant cost savings after integrating US equipment rental company NationsRent's 268 stores into its US subsidiary's network.
Ashtead Group plc says in its audited results for the financial year ended 30 April 2007 its acquisition of NationsRent for USD1 billion dominated the changes in the group for the year (
Forkliftaction.com News #270).
"It has allowed us to acquire an underperforming asset which provided significant cost savings and efficiency opportunities.
"A major focus of the year, therefore, has been ensuring we realised these integration opportunities."
Ashtead, which rents forklifts and other equipment, posted a 29% increase in underlying pre-tax annual profit from GBP67.5 million to GBP81.4 million (USD136.1 million to USD164.1 million). Revenues rose 48% from GBP638 million to GBP896.1 million (USD1.286 million to USD1,806.6 million).
Overall, Ashtead reported a pre-tax loss of GBP36.5 million (USD73.6 million) after charging exceptional costs, fair value remeasurements and intangible amortisation totalling GBP117.9 million (USD237.7 million). Ashtead's profit for 2006 was GBP81.7 million (USD164.7 million).
The exceptional costs related to the NationsRent acquisition for redundancies, retention bonuses, rebranding and other costs, totaling GBP31.5 million (USD63.5 million). An additional GBP68.0 million (USD137.1 million) was incurred relating to debt redeemed in connection with the acquisition. Another GBP11.0 million (USD22.2 million) was charged for intangible amortisation, mostly to do with the write-off of the NationsRent brand name.
Ashtead says in the two months post-acquisition, it introduced a combined regional and district management structure for Sunbelt and NationsRent, merged overlapping profit centres and combined the two companies' computer systems.
By end of January 2007, NationsRent's head office was closed and Sunbelt was located to larger premises. Ashtead introduced Sunbelt's profit share and sales commission programs to NationsRent staff and reshaped the acquired fleet to contain a similar proportion of higher returning assets.
These measures helped increase annual cost savings from the targeted USD37million to USD48 million.
Ashtead chief executive Geoff Drabble says NationsRent will grow the group's presence in the US rental market. "The major elements of the integration are behind us and the combined business can now focus on gaining further market share and continuing to improve dollar utilisation," he explains.
Ashtead rents forklifts and other equipment through its subsidiaries, US-based Sunbelt Rentals and UK-based A-Plant. The acquisition is expected to result in Ashtead becoming the US's third-largest equipment rental company and the world's second-biggest by rental revenues.