27.08.2010

Lavendon sees improving trend

Europe’s largest access rental company the Lavendon Group has posted its final first half results and is seeing an improving environment in most of its markets, although full year profitability is likely to come in below its original estimates.

These results follow the preliminary statement published at the end of June. Click here to see Lavendon Upbeat

Total revenues declined by seven percent compared to the first half 2009 to £106 million.

The revenues by country are: The UK held steady down just over one percent to £51.5 million, German dropped just over 16 percent to £21.7 million, Belgium fell just over 17 percent to £6.4 million, France increased by more than 16 percent to £7.2 million, Spain slipped 20 percent to £4 million and the Middle East declined 10 percent to £15.2 million.

The group saw a decline in underlying profitability, driven mostly by tough trading conditions at the start of the period, but pre-tax losses were reduced from a massive £40 million loss last year - as the company booked huge good will impairments and other write-offs - to a loss this year of £324,000.
Underlying profits before exceptionals are £1 million this year, compared to £5.3 million last year.

Country by country:- The UK improved its profitability from a loss of £7.1 last year to a profit of £1.7 million this year, Germany reduced its loss from £8.6 to £1.3 million, Belgium posted a profit of £277,000 compared to a loss last year of £8.7 million, France turned a loss of £195,000 into a profit of £192,000, Spain reduced its loss from £13.4 million to £210,000 and finally the Middle East saw its profit decline from £6.8 million to £5 million.

Net debt was reduced during the period from £182 million in January to £168 million at the end of June. Capital expenditure for the period was £7.7 million mostly in the UK and the Middle East. The company says that capex in the second half will largely be matched to sales of used equipment from its fleet.

The company says that after a very tough start to the year driven by poor weather it has seen progressive improvements in business conditions particularly during June and into July when revenues and even rates are showing improvements over the same weeks in 2009. In spite of this it says that slower than anticipated pickups in Germany and the Middle East will mean that full year profits are likely to come in below its original estimates.

Chief executive Kevin Appleton said: “Difficult market conditions impacted our trading performance in Europe in the first half, with these being further exacerbated by the extreme adverse weather at the start of the calendar year. However, we have seen progressive improvement in revenue levels through the second quarter, and our European operations, excepting Germany, are all now recording year-on-year revenue growth on a weekly basis.”

"The recovery of business levels in Germany, after the effects of a prolonged winter, has proven more protracted than we had anticipated, whilst in the Middle East recent further delays to large projects, particularly in the petrochemical sector, are reducing our rate of volume growth compared to our earlier forecasts."

"Whilst we are confident that the recovery in the Group's trading performance will gather momentum during the second half of the year, we now believe that the timing and rate of recovery being experienced in our German and Middle East markets will be insufficient to enable the Group to meet its overall profit expectations for the year. Nonetheless, we are confident that, due to traditionally strong second half cash flows and our ability to control capital expenditure, the Group is still on track to meet its year end net debt expectations."