Sector Report

Plant Hire Industry

Paul Whitney

Corporate Finance Director

Overview of the Market

In the UK, the Construction Equipment Rental & Leasing industry is estimated to be worth £6.8bn, with annual growth of 2.8% between 2014-2019 and 2.6% annual growth predicted in the next five years. However, increased competition has caused firms to cut prices to stimulate demand, which has weighed on industry profitability. The health of the UK economy, and the construction sector in particular, are the primary drivers of growth within the plant and equipment hire market. It is estimated that demand from the construction and civil engineering industry is worth approximately 80% of overall plant hire industry value. Since the Brexit vote, uncertainty has loomed over the construction industry as access to labour and resources is expected to become restricted.

The UK plant hire market remains fragmented; made up of a range of national hire companies and local independent providers. The five largest players in the market account for approximately 20% of industry revenue.

Plant Hire Companies

A profitability analysis on the sector from a pool of 1.409 leading UK-based Plant Hire companies revealed the following points:

  • 626 Plant Hire companies increased in value over the year with 256 of these companies increasing by more than 25%
  • 533 companies in the industry decreased in value, 192 decreased by more than 25%
  • The most profitable 636 companies made an average profit margin of 8.7%
  • The least profitable 775 companies made an average profit margin of 0.0%; the industry average is 4.9%

Based on this analysis, companies were then rated on their ‘Takeover Attractiveness’. A total of 502 companies have been rated as ‘Strong’, the highest possible rating, meaning that they are out performing the industry standard. The lowest rating of ‘Danger’ was awarded to 494 Plant Hire companies who are underperforming. 261 companies were highlighted to be highly attractive takeover prospects with a further 1,053 companies that were outlined to be worth considering.

Market Share

Speedy Hire Plc is currently the largest player in the market with 5.1% market share. Other notable companies are:

  • Ashtead Plant Hire Company Ltd - Estimated 4.9%
  • HSS Hire Service Group Ltd - Estimated 3.3%
  • Select Plant Hire Company Ltd - Estimated 3.2%
  • Lavendon Group Plc - Estimated 1.9%
  • Aggreko UK Ltd - Estimated 1.7%

M&A Activity in the Sector

Statistics indicate a total of 222 significant deals from January 2011 to September 2018 in the Plant Hire industry. Typically, only deals over £500k are registered. Data consists solely of Acquisitions, Management Buy-outs, Management Buy-ins, Secondary Buy-outs and Mergers.

Upon breaking down the deal type, M&A activity within the sector is mainly categorised by acquisitions, with 185 since January 2011. There were also 22 MBOs and 7 MBIs. A geographical breakdown of the deals shows that the South East saw the most M&A activity, benefitting from 34 deals in the time frame. The North West has also seen a significant number of deals, with 29 deals completed. The remainder of the deals are spread throughout other regions whilst slowly declining to Northern Ireland, with just one deal.

Deal flow has been significant in each year with an increasing upwards trend through 2012-2017. This is likely a result of favourable economic condition, as larger players look to consolidate market share. With 24 deals through September 2018, forecasting the same rate to the end of the year gives 32 deals. This would be the largest contraction in the data set since 2011 to 2012. If the trend continues, this data would show a lack of confidence around acquisitive businesses.

Plant Hire Benchmarking Data Mean Median Lower Quartile Upper Quartile
Turnover Growth/Decline (%) 10.73 5.31 (6.59) 18.85
EBIT Margin (%) 10.90 8.53 1.81 19.42
EBIT Growth/Decline (%) 6.42 1.85 (30.49) 55.08
EBITDA Margin (%) 17.91 17.23 3.86 34.62
EBITDA Growth/Decline (%) 6.77 2.97 (20.92) 41.72
Total Net Assets Growth/Decline (%) 15.13 11.27 (0.68) 25.96
Current Ratio 3.76 1.30 0.72 2.56
Market Research Benchmarking

Using full company accounts filed in the last two years, excluding companies with nil turnover in either period.
Search Criteria: SIC-Code “7712 - Renting and leasing of trucks” or “773 - Renting and leasing of other machinery, equipment and tangible goods” Turnover below £20m.

M&A Activity Source

Experian Market IQ (September 2018)
Search Criteria: SIC-Code “7712 - Renting and leasing of trucks” or “773 - Renting and leasing of other machinery, equipment and tangible goods”.

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