MAJOR contractors have continued to increase their hire spending year on year, with 60 per cent of the top 60 showing more investment, according to a leading analyst of the plant hire sector.
But hirers still appear to be failing to capitalise on the increased workload as average profit among hire firms hit a fiveyear low.
The annual Plant Hire Investment Report also shows that acquisitions and large supply deals have continued to boost the dominance of the largest hire companies, a trend that is set to continue as a number of sole supply deals fill the coffers.
Author Catherine Stratton notes that in the past four years, the top 10 hirers have broken further away from their peers, in turnover at least. Of the top 60 hirers' aggregated turnover, the top 10's share has risen by 8 per cent to 76 per cent since 1999, while the top three - Ashtead, Aggreko and Hewden Stuart - have increased their share by 13 per cent, to 52 per cent last year.
The analysis of contractor spending shows that growth is continuing. Last year's average investment in hire was £9.55 million, up 2 per cent on the previous year, while the lowest spend in the top 60 was £2.8 million, a rise of 25 per cent.
Three contractors, Murphy, McNicholas Construction and May Gurney spent more than 9 cent of their turnover on hire activities, with Murphy raising its spending by a colossal 184 per cent on the previous year to £22 million.
But O'Rourke's purchase of Laing Construction and the growth of its Select Plant subsidiary saw the firm slash its percentage hire spend from 10.5 per cent in 2001 to just 2.9 per cent last year.
Amid the growth, the trend in hirers' profits remains resolutely down. Last year, the average pre-tax profit among the top 50 hirers dropped to £3.6 million, a five-year low, although this was hit heavily by large losses from Ashtead and GE Equipment Services.
Ms Stratton added: 'Last year we concluded that the hire market was still suffering from over-capacity. A year on little seems to have changed - indeed things seem to have got worse for some of the leading players, yet the past year has seen some significant rationalisation.'
AMONG the report's hire leagues, star performers included Hydrex, which had the highest rise in year on year turnover at 54 per cent, Independent Access which grew its plant fleet by 61 per cent and managed to raise profits by 69 per cent, and Hydrainer Pump Hire, which topped the profit growth league with a 90 per cent leap in trading profit.
Hydrainer also swept all competition aside in the margins league with 27.4 per cent, ahead of Emsley Crane Hire (20 per cent) and Mabey Hire (19 per cent).
Andrews Sykes topped the all-important performance measure of pre-tax return on plant, with pre-tax profits amounting to 35 per cent of the fleet value.
Some way behind was HSS on 24 per cent and Hydrainer on 22 per cent.