01.03.2011

Lavendon Group 2010 results

The Lavendon Group, Europe’s largest powered access rental company has reported its preliminary full year 2010 results.

Revenues were roughly flat down around half a percent to £225.4 million while underlying pre-tax profits dropped just over five percent to £13.9 million.

However this allows for exceptionals and amortisation charges. When these items are included, the company posted a pre-tax profit this year of £10.7 million compared to a loss last year of £47.8 million.

During the year the company cut its net debt load from £182.1 million to £140.3 million.

The company says that underlying market conditions “stabilised” progressively across most of its European operation during the year, although extreme weather affected the first quarter and December. It also says that 2011 has started as expected.

In the Middle East it says that Saudi Arabia and Abu Dhabi are slowly improving, but are being offset by on-going decline in Dubai

Chief executive Kevin Appleton said: “Trading in 2010 remained challenging with the continuation of the cyclical market slowdown. We did however see an improvement across the majority of the group's operations in the second half which enabled us to deliver results in line with market expectations.”

"In the last few weeks, we conducted operational and business plan reviews with some external support, and these have confirmed opportunities to improve efficiency and drive top-line growth going forward. Following these high-level reviews, we are working to produce detailed implementation plans. The board is confident of the Group's ability to deliver increased shareholder value through the cycle."

Vertikal Comment

These results are pretty much in line with expectations and considering the fact that 2010 was affected at both ends with extreme weather the result is not too bad. However the company will be looking to make significant improvement in the first half of 2011 which should be possible.

If the weather holds up through March and the European markets continue to show positive signs it could see a surprising bounce back... given improving rental rates and improving utilisation.

The company does have opportunities to efficiency and needs to do this, but it cannot afford any negative disruption that some external reviews and resulting implementation can cause.

With shortages of new equipment possible by late 2012 and beyond the future potential is positive, the company does need to ‘play its cards right’ though.