27.11.2007

Profits triple at UK Forks

VP, previously known as Vibroplant, has reported strong first half numbers with revenues rising by 24 percent to £76 million, leading to strong improvements in margins and an increase in operating income of 53 percent to £13.4 million. Pre-tax profits were up 55 percent to £12.1 million.

The company’s UK Forks business, one of the UK’s top three telescopic handler rental companies, had sales of £8.4 million, an increase of over 18 percent, while operating income almost tripled to £1.93 million, more than it generated for the whole of 2008.

VP said “UK Forks had an exceptional period delivering six month profits in excess of that achieved for the whole of last year. Residential and general construction markets each account for around half of UK Forks business and demand was buoyant from both sectors.”

“Recovery of market share in the critical South East territory has been an important contributing factor. UK Forks’ unique product offering of a specialist telehandler service on a national basis continues to offer economies of scale to those customers who wish to take costs out of their supply chain. Performance within UK Forks was also aided by strong international demand for the telehandlers which we have been disposing of as part of our planned fleet renewal programme.”

“As usual, we expect a less busy second half, including as it does the traditionally weak Christmas period, but we nevertheless anticipate a very satisfactory result for the year as a whole.”

The group’s Hire Station, tool hire division, also reported half year profits above those for the full year 2006.

Capital expenditure on rental assets at the company almost doubled to £24 million.

Vertikal Comment

An exceptional set of first half numbers from VP, particularly its telehandler business that has managed to boost its revenues in what many see as a relatively flat, although strong market.

While the company does not break down its utilisation ands rate gains an increase such as it has seen is surely driven by a combination of better average rates and utilisation. The company is almost certain to have also benefited from strong used sales prices for the used machines that it has sold from its fleet.

Although the residential construction market is looking shaky in the UK, the fact is that the underlying housing shortage has not gone away and house prices have been unquestionably become over inflated.

Even if there is a softening in house prices, builders sitting on land banks will still be able to build and sell new housing at decent profit margins, meanwhile the government has pledged to increase house building so while the market might be nervous, the second half of the year should remain strong for VP.