Sector Report

Plant Hire Industry

Paul Whitney

Corporate Finance Director
13/03/20

Overview of the Market

The estimated market size of the Plant Hire industry in the U.K. is £7.1bn. The industry is experiencing a healthy compound annual growth rate (CAGR), expected to reach 2.9% through 2015-20. Many firms in the construction sector rent or lease equipment from the industry to minimise costs and support profit margins. As such, industry performance is tied to that of the wider construction sector. A surge in housing starts boosted demand substantially prior to the start of the period in 2013-14. Since then, activity in most downstream markets has trended upwards, due to increased government capital expenditure and a booming housing market.

Employment and enterprise numbers are both expected to rise over the period. The residential and commercial construction sectors have been primary drivers of this expansion. The prevalence of large-scale projects and programmes throughout the country has provided opportunities for many different firms to enter an already fragmented industry. However, increased competition has caused firms to cut prices to stimulate demand, which has weighed on industry profitability.

Plant Hire Companies

A profitability analysis on the sector from a pool of 1,384 leading UK-based Plant Hire companies revealed the following points:

  • 589 Plant Hire companies increased in value over the year with 225 of these companies increasing by more than 25%
  • 550 companies in the industry decreased in value, 189 decreased by more than 25%
  • The most profitable 619 companies made an average profit margin of 8.0%
  • The least profitable 769 companies made an average profit margin of 0.0%; the industry average is 4.4%

Based on this analysis, companies were then rated on their ‘Takeover Attractiveness’. A total of 481 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 478 Plant Hire companies who are underperforming. 253 companies were highlighted to be highly attractive takeover prospects with a further 1,032 companies that were outlined to be worth considering.

Market Share

Speedy Hire Plc is currently the largest player in the market with 5.0% market share. Other notable companies are:

  • Ashtead Plant Hire Company Ltd - Estimated 6.0%
  • Speedy Hire plc - Estimated 5.1%
  • HSS Hire Service Group Ltd - Estimated 3.5%

M&A Activity in the Sector

Statistics indicate a total of 184 significant deals from January 2011 to July 2019 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 153 since January 2011. There were also 18 MBOs, five MBIs and two mergers. A geographical breakdown of the deals shows that the South East saw the most M&A activity, benefitting from 27 deals in the time frame. The North West has also seen a significant number of deals, with 25 deals completed. The remainder of the deals are spread throughout other regions whilst slowly declining to Northern Ireland, with just three deals.

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 10 deals through June 2019, forecasting the same rate to the end of the year gives 24 deals. This is a good recovery from the lack of deals in 2018. If the trend continues, this data would show confidence around acquisitive businesses.

Industry Benchmarking Information – July 2019

Hallidays’ client base consists of small to lower mid-market enterprises. Our benchmarking analysis reflects businesses with turnover below £20m, in line with the majority of our clients in this sector.

Plant Hire Benchmarking Data Mean Median Lower Quartile Upper Quartile
Turnover Growth/Decline (%) 3.25 0.85 (9.58) 12.85
EBIT Margin (%) 10.66 9.13 1.66 19.11
EBIT Growth/Decline (%) 1.72 (2.53) (37.86) 39.84
EBITDA Margin (%) 19.58 18.30 5.33 38.97
EBITDA Growth/Decline (%) 2.01 (2.44) (29.30) 29.80
Total Net Assets Growth/Decline (%) 8.01 7.57 (3.67) 19.83
Current Ratio 3.39 1.25 0.69 2.78
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 (July 2019)
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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