11.07.2013

Second quarter edges up for Lavendon

International access rental group Lavendon has issued a half year trading statement and announced improved profitability.

Revenues in the first quarter continued to decline in the UK falling six percent compared with last year for both the quarter and half year. Germany meanwhile improved its performance significantly and was down just one percent in the quarter and six percent for the half year. Belgium firmed as well and was down 10 percent for the quarter and 11 percent for the half year.

France built on its positive first quarter with a 10 percent gain – leaving it up six percent after six months. Finally the Middle East continued to lead the way with revenues climbing 26 percent in the quarter and 30 percent for the half year.

Overall group revenues were flat at the same level as last year, however the company says that improved efficiencies and lower interest charges indicate solid gains in profitability and improved margins.

The major downside in its brief statement is that it says that while the UK improved in the second quarter it still finds the market difficult and that it has had to resort to some discounting of rates in order to maintain volume and market share.

In the Middle East it is adding to its fleet in order to maintain the strong momentum, and this business is now approaching 20 percent of group revenues.

Net debt levels increased as the company predicted from £97 to £104 million due to higher capital expenditure. It expects this to drop back to around £97 million by year end.

Chief executive Don Kenny said: "The strong revenue growth seen in our French and Middle East businesses in the first half has offset the revenue weakness experienced in our other markets, illustrating the strength and benefit of the Group's geographic diversity. Our margins and profitability have continued to improve in the period, ensuring we are well placed to demonstrate further progress in our key objective of increasing our return on capital employed during 2013. Whilst ever mindful of the continuing economic uncertainties in our European markets, the Board remains confident of delivering its expectations for the year."

Vertikal Comment

Overall this is a positive statement, and it is good to see that the situation in Germany appears to finally be coming under control, which could provide positive growth prospects next year. The major downside is that the company is struggling a little in the UK in what is a reasonable and improving market. Hopefully the company will hold its nerve and not be tempted down the dead end track of rate cutting and negativity.

The company’s updated IT platform should now be really functioning well and ought to be offering higher yields as staff become more adept at using it. Nationwide Platforms in the UK does so many things really well – and has the muscle and the facilities and the systems to lead the market from a positive aspect.