The plant-hire group Ashtead yesterday announced a sharp drop in group revenues for the first four months of this year, and predicted little improvement.
In a trading statement at the company's annual meeting, the chairman, Henry Staunton, announced an 8.3 per cent drop in group revenues for the four months to the end of August and warned of "generally flat market conditions for the group as a whole in the current year".
Mr Staunton said that the position in the company's US subsidiary, Sunbelt, which accounts for about 65 per cent of group revenues, had stabilised with a drop, in dollar terms, of just 0.5 per cent from a year ago. Rental rates had shown some signs of improvement and Sunbelt had continued to take market share, he added.
The group's results for the UK were less encouraging, with a 13 per cent drop in overall revenues and a 6 per cent drop over the previous year on a same-store basis. The UK division has closed 19 branches in the past year.
Although Mr Staunton said in the statement that the company would "continue to review the cost base" in the UK, the chief executive, George Burnett, said that large-scale rationalisation was not high on the agenda at the moment and added that the company was in the shape they wanted to be in going forward.
The group has had a torrid time over the past 18 months. In July it reported a pre-tax loss of £42.2m for the year to 30 April and also announced the departure of Sunbelt's chief executive, Bruce Dressel, following the discovery of alleged accounting manipulation. Mr Dressel has yet to be permanently replaced.
The company has said that Mr Dressel was not believed to be responsible for the accounting problems.
Nick Walker, an analyst at Evolution Beeson Gregory, said that although the outlook for the group was better than six months ago he remained "fairly negative" about the prospects. Some improvement in the US construction market should help it but the hire market tended to lag six to nine months behind any upturn.
Mr Walker added that the loss of Mr Dressel was a major blow as he had been "a driving force" and "by far the best thing about the business".
Mr Walker said management in the UK had been "very slow to react to three years of deterioration". Ashtead had failed to make rationalisation in the business and continued to maintain a massive infrastructure despite profits falling by around two-thirds in the last three years, he added.
Shares in the company closed down 2.5p at 17.5p.
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