01.03.2002

Lavendon reports mixed results

The Lavendon Group, owner of access platform hire companies Zooom and Nationwide, has released its annual results.

At the end of its ‘two year accelerated investment programme’, which saw a £168 million spend, the company has announced a profit of £9.9 million in 2001, before tax and exceptional costs.

“The effect of the investment programme has been to increase the Group’s fixed cost base” said executive chairman David Price. “The inevitable drag effect on the Group’s profitablity is considerable, as it takes new depots approximately two years to produce acceptable returns.”

In the UK, investment in Nationwide Access has boosted the number of depots to 50, with 6,014 units for hire compared to 5,188 in 2000.

Lavendon revealed that, despite a slowing demand from market sectors including manufacturing and telecommunications, UK business had gone well during 2001. Revenues were increased by 26%, up to £54.3 million from £43.2 million in 2000. Operating margins remained at 23% and the operating profit rose by £2.6 million in the year, to reach £12.5 million. The British customer base was boosted to 13,590.

Lavendon expects that Germany will be its main source of European powered access rental for the coming three to five years. The network currently has 44 depots, with 4,250 units, an increase from 2,600 the previous year.

However, Germany's current economic problems have had an effect and Lavendon blamed the ‘widespread weakness of the German economy’ for a reduced operating profit of £2.4 million, compared with £3.7 million in 2000.

"Customers, both new and existing, are spending less on powered access simply because they have smaller order books themselves. That has been the case for most of last year and is expected, if anything, to worsen in the current year.” said Price.

“The significant difference between the UK and German businesses is that the maturity profile of the depot operations is very different, with the German depots being much less developed than in the UK.” stated Price. “As the German network matures, and the levels of sophistication approach that of the UK, the business will achieve, and perhaps exceed, UK performance levels, as the medium and long term potential for powered access rental is realised.”

Lavendon also stated that it expected European demand for powered access to quadruple in the next five to ten years.

Meanwhile, in France, Zooom suffered a loss for the year, badly affecting the Group’s overall performance and profits. This was put down as an ‘inevitable part of the process of entering a new market’.