15.01.2013

Lavendon up 4%

International access rental company Lavendon has issued its full year trading statement which show revenues up four percent with overall performance expected to be at the upper end of its forecasts.

The increase means that the group is likely to come in with revenues in the region of £235 million.

Nationwide Platforms in the UK which represents 48 percent of the group’s revenues was flat for the year and the fourth quarter – recovering from a three percent decline in the third quarter.

Gardemann in Germany ended the year down six percent, partly due to a reduction in the fleet and overheads which have been part of the company’s restructuring programme.

Belgium had a weak fourth quarter with revenues falling four percent but finished the year up one percent.

France is Europe’s star with revenues growing 17 percent as the company expands its fleet and its market coverage. This in what has been a tough market in 2012.

The Middle East which now includes a wide number of countries in the region and further afield, remains the star performer with revenues up 35 percent for the year, following a strong fourth quarter in which rental revenues climbed 41 percent. The business now represents 15 percent of total revenues, the group’s third largest operation after Germany.

The revenues are for rental related only and do not include any equipment sales.

The Group's net debt level at year end was £8 million lower on the year at £99 million, in spite of a significant increase in capital expenditure during the year.

Chief executive Don Kenny said: "The group has continued to make good progress in 2012, despite the challenging trading conditions in many of our European markets. The encouraging growth we are seeing in our French and Middle East businesses, together with the actions we have taken to improve our overall operational and capital efficiencies are delivering improvements in the group's profitability, margins and return on capital. The board therefore expects the Group's results for 2012 to be at the upper end of expectations, and looks forward to making further progress in 2013."

Vertikal Comment

This is another solid result from Lavendon in a sluggish market, the final results are likely to be even better, with steady revenue growth coupled with a faster improvement in profitability and reduced gearing.

The company is a year into a four year programme aimed at getting all five of its regions decently profitable and matched to current market potential, while reducing debt levels. This is relfected in the shrinking of the German and Belgian fleets, with substantial increases in the Middle East and France.

The next stage is to introduce the group’s latest management and information systems – the UK completed the installation of a substantially upgraded IT system in December which is said to speed up order entry and introduce dynamic pricing – along with operational programmes throughout the group.

In other words the programme is to get in shape and ensure that all corners of the business are operating consistently before considering any significant moves such as major acquisitions or geographic expansions.

The business is on an upward trajectory and should do even better in 2013.