30.08.2012

Lavendon more than doubles profits

International powered access rental specialist Lavendon has released its profit numbers for the first half which show profits rising almost 240 percent, while net debt is cut by 26 percent.

The group, which includes Nationwide Platforms in the UK, Gardemann in Germany, DK rental in Belgium and Rapid in the Middle East published its preliminary revenue numbers back in July - See Lavendon beats expectations. They have now been confirmed with total revenues of £114.5 million, an eight percent rise on last year’s £106 million.

Pre-tax profits were up 240 percent to £5 million, while net debt was cut by 26 percent to £98.3 million. The company’s statement reported “robust UK performance with further market share gains and good margin growth and strong rental revenue growth in France and Middle East.” It also added that capital investment plans, including expansion in Middle East will be fully funded from annual cash flows

Chief executive Don Kenny said: "Performance in the first half of the year has been good, with our results coming in ahead of our original expectations. Revenues, profits, margins and our Return On Capital Employed have all improved over 2011 whilst net debt has continued to fall."

"With general market conditions reflecting the uncertain economic environment, the group's performance has principally been driven by the successful, on-going implementation of our business plan to improve ROCE. We have made encouraging progress to date and have established a firm foundation to support the on-going development of the group which is not wholly reliant on buoyant market conditions. It is our continued aim to drive ROCE to a sustainable level in excess of the cost of capital over the business cycle and we believe the Group is well positioned to achieve this."

"Trading since the half year end has been in line with our expectations and we are well positioned to deliver another year of financial progress and, in the medium term, significant value to our shareholders."

Vertikal Comment

This is a first class bottom line number from Lavendon which indicates that the company can both perform well in what is still a tough market and fund some long overdue fleet updates without too much of a struggle.

The company is doing a lot of things right at the moment and should continue to post solid numbers with some serious upside potential when the market gathers pace. Smaller rental companies should take heart as it brings stability to rental rates and pushes the quality and safety aspect of its operations.

Shareholders must surely be delighted that they rejected the takeover bids of 18 months ago and there is still a good deal of upside potential left to come if the group continues on its current track.