14.01.2016

Lavendon ends on a high

Lavendon, the UK-based international access rental group has issued a preliminary trading statement for the full year 2015.

The statement - which includes revenue growth percentages - shows that all regions achieved a positive fourth quarter, which according to the company will result in a final result at the top end of expectations.

Looking at the major regions, Nationwide Platforms in the UK, which represents 46 percent of the group turnover, saw revenues one percent higher in the fourth quarter compared to last year although the full year will still be one percent down on 2014 due mostly to a slower first quarter.

The Middle East - the star performer for several years - posted a 10 percent gain in the fourth quarter in spite of the same period last year also being high, this due to a larger fleet and broader geographic coverage. It ends the year up seven percent and now represents 22 percent of group revenue.

Continental Europe surged seven percent, ending the full year up three percent. In the quarter all three operations grew, with France up 13 percent, Belgium bouncing back from a 23 percent decline in the same quarter last year with an 11 percent rise this year, and even Germany returned to growth with a three percent rise.

As a result the group as a whole saw revenues for the quarter up five percent on the same period last year taking revenues for the year as a whole to somewhere in the region of £250 million, which would be a new record.

Net debt at the end of the year increased to £124 million compared to £119 million or £90 million at constant exchange rates.

Chief executive Don Kenny said: “The group has delivered an improved year on year performance, with growth in revenues and further operational efficiencies driving increases in profitability, margins and Return On Capital Employed. The board expects the group’s results for 2015 to be at the top end of market expectations."

“As we move into 2016, whilst recognising the recent increase in uncertainty of the economic outlook, we are looking forward to building on the momentum we have developed during the past few years and to making further progress in the year ahead.”

Vertikal Comment

This is clearly a solid result from Lavendon with all of its operations showing a positive fourth quarter. Most encouraging is the bounce-back in Germany, and the return to growth in the UK, which have hopefully dropped through to margins. The company clearly states that a key factor in the UK was stable rental rates which hopefully quashes some anecdotal reports of rate cutting beginning to creep in.

The strong growth in Belgium is also encouraging given the freefall that business was in this time last year, while the onward march of the French business is very interesting. The Middle East continues to do amazingly well, but clearly - given the threats in region both economic and otherwise - it is critical that it continues to develop and expand from its original UAE base given that it is now a key cornerstone of the group’s success. With last year’s bottom line spoilt by write-downs, 2015 ought to be every bit as good as the statement suggests.

All in all it looks like the company’s result for 2015 will bring cheer to shareholders and should be encouraging to the industry as a whole. The company does have some significant challenges ahead of it, such as moving its UK delivery service back in house, ensuring that strategies in the Middle East negate any fall outs from the plunging oil price and increased tensions, while rebuilding the Gardemann business in Germany in the face of tough local competition.

So while it looks like 2015 will be an excellent year for Lavendon, it does have a good number of challenges on its hands to ensure that 2016 is even better.