12.07.2012

Lavendon beats expectations

International powered access rental company Lavendon – owner of Nationwide Platforms in the UK, Gardemann in Germany, DK Rental in Belgium and Rapid in the Middle East - has issued a moderately positive first half trading statement, with overall results beating expectations.

Group revenues were up five percent overall – six percent on a constant currency basis and including new equipment sales. On the same basis the second quarter was up five percent. This would take revenues to somewhere in the region of £115 million.

The group’s largest business – Nationwide Platforms - saw revenue rise one percent in each quarter for the six months, it now represents 48 percent of total group revenues, down one percent on last year. The company says that pricing improvements continue to compensate for lower year on year volumes.

In Germany, revenues declined five percent in the second quarter and two percent for the six months - due, says the company, to the more disruptive timing of public holidays in May this year compared to last year. Growth bounced back in June and is expected to continue through the second half.

Belgium and France did far better with half year growth levels of three and 19 percent – France in particular boosted by significant inflows of equipment from the closed Spanish operation.

The Middle East, the group’s third largest operation, benefited from a strong market as well as a significant expansion to the fleet. Half year revenues climbed 30 percent, with the operation now representing 15 percent of Lavendon’s revenues.

Lavendon says that margins and returns along with the disposal of under-utilised equipment has resulted in improved profitability. Net debt was cut by £8 million during the six months (after taking exchange rate fluctuations into consideration) to £98 million. This is not expected to change in the second half, with surplus cash flows being channelled into capital expenditure.

Chief executive Don Kenny said: "The first half has seen an encouraging improvement in both revenues and margins. Whilst mindful of the continuing economic uncertainties, it is likely, given the group's current performance, that our results for the year will be ahead of the board's previous expectations."

Vertikal Comment

There is not a great deal of specific detail in the trading statement, but it certainly looks very positive, given the current economic uncertainties.

The falling Euro will probably drag down top-line sterling denominated group results in the second half and the German business, which represents 21 percent of total revenues, is clearly still struggling compared to the other businesses. There is also a chance of a few weaker months in the Greater London area during the Olympics, although clear-up and the start of transformation work may well compensate for this from September onwards.

However the tighter geographic spread of operations and greater focus on rental rates, quality of operations and professionalism is clearly paying off and should ensure that the positive trend continues overall, not only in the second half but at an even brisker pace in 2013 and beyond.

All in all a very positive statement.