28.06.2010

Lavendon upbeat for 2010

Europe’s largest powered access rental company, Lavendon has reported an improvement in market conditions in spite of a 10 percent fall in first half revenues.

The company issued its preliminary trading statement for the six months to the end of June which incorporate actual numbers for the first five months, the full interim results will be issued at the end of August.

Group revenues, excluding sales of used equipment from the rental fleet, to the end of May fell by 10 percent compared to the same period last year although the company says that the level of the decline has been reducing on a monthly basis throughout the period.

The net result is that several of the group’s companies are now back into positive growth. It says that current trading indicates that the trend will continue throughout the rest of the year, giving the business a much stronger second half and allowing it to achieve its original projections for the year as a whole.

The group’s net debt as of the end of May was £176.3 million almost £6 million lower than at the start of the year.

In the UK revenues for the first five months were down by seven percent, but are now consistently above last year’s levels with rental rates also improving.

German revenues fell by 16 percent for the five months, some of which the company blames on the severe weather during the first quarter. It says that it expects the second half to be considerably better.

Revenues in France and Belgium grew by five percent, with particularly strong growth seen in France. The trend is expected to continue through the second half.

The Spanish company saw revenues decline by a further 22 percent in a tough market, Lavendon says that reduced costs have kept the business around break even and positive in cash terms.

In the Middle East, the group’s star performer in recent years, rental revenues declined by eight percent, while total revenues including equipment sales, fell 13 percent. The company puts this down to a slower pick-up in Saudi Arabia and Abu Dhabi as well as delays to a number of large projects. The delayed business is expected to contribute to a stronger result in a stronger second half.

Vertikal Comment

These preliminary numbers are encouraging, particularly in markets where Lavendon has a strong market leadership position, such as the UK, Belgium and the Middle East. In the UK recent initiatives it has taken on rates appear to be having an impact – given the company’s market strength it could continue to lead the industry to further rate improvements throughout the second half.

Germany is a different situation, in spite of the group’s market leadership position in terms of fleet size, it does not wield the same influence for historic reasons and because of the fragmented nature of the market.

All in all this is a very encouraging report and barring any major upsets the group should have a reasonable 2010, particularly in comparison to 2009.