20.04.2011

Lavendon up 11%

European access rental company Lavendon has reported an 11 percent increase in year to date revenues.

The brief trading statement released prior to the group’s Annual General Meeting later today is for the period January to this week.

The UK, almost half the business, was up 11 percent, Germany 17 percent, Belgium 24 percent, France 20 percent and even Spain improved 10 percent – only the Middle East saw revenues decline slipping seven percent.

The company statement said: "At the time of the group's preliminary results in March we stated that trading in the opening months of the year had been in line with the board's expectations and this remains the case. The operating environment still remains difficult to predict, but during the first quarter group revenues on a constant currency basis (excluding ex-fleet equipment sales) increased by 11 percent compared with the prior year, albeit a prior year period that was particularly weak due to adverse weather conditions.”

“Revenues in each of our European businesses have increased in the period, reflecting a combination of volume growth and pricing improvements. Our Middle Eastern revenues were down on the prior year with volumes broadly unchanged but average prices yet to recover. Group EBIT and EBITDA margins and ROCE have all improved compared with the same period of last year.”

The company also says that it is pressing ahead with changes to help improve margins, following a review. It will include: management appointments, pilot studies and, in some areas the progressive implementation of “identified initiatives”.

“We have stated that the majority of benefits from our operational and business plan reviews will accrue in 2012 and beyond. Developments in the first quarter of the year have reinforced our belief in both the timing and the magnitude of these benefits and accordingly we remain confident of the group's ability to deliver improving shareholder value through the cycle."

Vertikal Comment

This is yet another piece of positive news that reflects the improving business situation in much of Europe. The results reflect the anecdotal input that we have been receiving over the past two months or so.

Lavendon has, in several markets led the way back towards more commercial pricing levels, which most of its competitors are more than willing to follow and abide by. Hopefully unconfirmed reports that there are signs of the steady price improvement trend being rolled back are without foundation or one-off aberrations.

Lavendon is a large enough player in the UK, Germany, Belgium and the Middle East to set the pricing agenda and well respected enough for other large public companies to follow its stated policy of charging a fair price for delivering quality and safety. This policy is the right one for both itself and the market as a whole. Other publicly quoted rental companies with significant access fleets could benefit from following its lead more closely.