08.06.2006

VP just misses the £100 million

VP, owner of UK Forks, one of Europe’s largest telehandler rental companies, has reported full year revenues up 10 percent to £99.4 million. Operating profits jumped 17 percent to £12 million, while pre tax profits rose by 13 percent to £11.2 million.

The UK Forks business put in a strong performance with revenues rising by 11 percent to £14.3 million and operating profits leaping 44 percent to £2.1 million.

The company says that it made further progress in the all important house building market, although demand softened in the fourth quarter. Activity within the general construction and other sectors remained firm.

Growth this year is expected to be at a slower level, although progress continues with national supply agreements and increased business from cladders and roofers.
UK Forks invested £3.1 million in its rental fleet, the same as it spent in 2004/5

Interestingly UK Forks says that the residential construction in the UK is getting higher with apartments now representing 40 percent of the total market. This trend is also leading to tighter job sites, creating the dilemma of a requirement for greater heights at the same time as needing it to come from a more compact machine.

This has turned UK towards the larger 360 degree telehandlers along with the smallest most compact models.

Hire Station

Hire Station, the group’s tool hire business, has finally returned to profitability. Operating profits were £1.9 million, before restructuring costs of £500,000 associated with the Pivotal acquisition, this compares to a loss of £700,000 last year. Much of the profitability is down to a 21 percent improvement in revenues to £41.9 million.


Jeremy Pilkington, VP chairman said: "This time last year the Board signalled its intention to utilise the financial strength of the Group more positively. We are pleased that in the period we have been able to deliver both organic growth and acquisition derived opportunities in support of our longer term growth aspirations.

The main challenge for us as we enter the new financial year is to deliver the promise offered by the businesses we acquired in 2005/2006, whilst of course not neglecting the continuing profit contribution from our existing businesses.

The economic and competitive environment, as always, presents a number of challenges but we are cautiously optimistic of our ability to deliver further progress in the year ahead."

Vertikal Comment

VP has made strong progress in the past two years and as a result its share price has soared. The UK Forks division has turned in a surprisingly good result. Its comments on the changing market raise a number of warning flags, driven by the shift of the UK market towards three, four and five storey apartment blocks, rather than traditional two storey houses.

This, along with the increased use of more congested infill development and brownfield sites might signal demand for larger telehandlers, but it might also signal a shift away from telehandlers to self erecting tower cranes.

It is interesting to note that fast growing Fork Rents has not only expanded its telehandler fleet but has also dipped its toe in the tower crane market. The big question for VP when it comes to the long term development of UK Forks must be whether it should look at bolting on a self erecting tower crane business to compliment its UK forks business.