Flattish first half for Vp

UK rental group Vp owner of telehandler rental company UK Forks, low level access specialist MEP and Brandon Hire Station has published its preliminary first half results.

Total revenues for the six months improved 2.4 percent to £190.9 million, with UK infrastructure, including water, transmission and rail, performing well, while housebuilding demand remains “subdued but stable” and general construction remains challenging. Overseas, a small part of the whole, the outlook is apparently more promising.

for the period increased 11.2 percent to £19.9 million, while net debt was cut by 10.4 percent to £133.4 million. Capital Expenditure was almost 28 percent lower than last year at £27.8 million.

Chairman Jeremy Pilkington said: "We have delivered a solid performance with continuing sector leading returns in the period reflecting the strength of our diverse business offering. We are particularly pleased to have maintained net margin and a strong return on average capital employed, demonstrating high quality of earnings in difficult market conditions.”

"Having multiple sector exposure diversifies our revenue streams and has contributed to the robust performance in the period, with infrastructure demand remaining supportive, and whilst there are immediate challenges within general construction, I am confident that the actions taken will be of benefit in the medium term. The Group continues to produce strong operating cash flows and maintains a solid financial base, having refinanced our RCF in November on similar terms for a further three years, and we are well positioned for growth.”

"Vp has an excellent track record of successfully navigating difficult markets and the diversity of our operations provides us with a solid foundation from which to grow the business both organically and via acquisitions. We remain confident in the group's ability to drive demand for our products and services which embrace our customers' needs for sustainable and digital solutions. There is a great sense of enthusiasm throughout the group, driven in part by a refreshed leadership team, which makes us optimistic for the future and our ability to continue to deliver an attractive level of returns for our shareholders."

Vertikal Comment

This is an OK result from Vp, given the uncertainties in the UK market - which makes up most if its business - but not fantastic. The statuary pre-tax profit looks good and the further debt reduction positive of course. However, the reduction in capital expenditure on the rental fleet is a little worrying given an increasing the amount of new kit available to rent.

We have also just seen a change of chief executive which can always be a concern, especially when they come from outside the company and outside of the market sector. And dare I say they have a purely financial background. Although to be fair the outgoing chief executive Neil Stothard was a purely financial person when he joined the company as finance director in 1997, and he steered the company through some of its best years. Although it was seven years before he moved up to the top job.

Vp is a great company and is still controlled by the Pilkington family with veteran Jeremy Pilkington as chairman and is in good shape to weather any storms that may be brewing.