28.02.2013

Profit surge at Lavendon

International powered access rental company Lavendon - owner of Nationwide Platforms, Gardemann and Rapid - has released final results that are above expectations.

As we previously reported revenues were up four percent to £234.6 million, however the pre-tax profit for the year was £20.8 million, 46 percent up on last year. However if one looks at the “underlying performance”, stripping the non reoccurring charges such as the closure of the Spanish operated etc... pre-tax profits were £27.6 million, an improvement of 26 percent on last year.

The company says that the improved profitability came from a series of measures, including an overall two percent increase in rental rates and a solid jump in return on capital. To see revenue breakdowns by country Click here to go to Lavendon up 4%

Chief executive Don Kenny said: "The Group made good progress during 2012 with results for the year at the top end of our expectations despite challenging trading conditions in our European markets. The strong revenue growth from our French and Middle East businesses, together with the disciplined delivery of our business plan, have delivered considerable improvements in the Group's profitability, margins and return on capital employed.”

“Our robust cash flows have also supported increased fleet investment, funded an enhanced dividend and enabled further debt reduction."

"As we move into 2013, continued improvement in ROCE (Return on Capital Employed) remains a key priority. Our focus will remain on the timely delivery of further operational efficiency gains to enhance margins, and on the allocation of capital to support growth opportunities.”

“Our 2013 investment programme will be fully funded from our strong cash flows, as we continue to refresh our European fleet and expand our Middle East business where we see strong demand characteristics."

"Our increased dividend underlines the board's confidence in the group's future prospects. While trading since the year end has been disrupted by the adverse weather seen in the UK and Continental Europe, and being ever mindful of the continuing economic uncertainty, we remain confident of our expectations for the year as a whole and believe we are well positioned to deliver another year of financial progress and continue to create increased shareholder value over the medium term."

Vertikal Comment

This is a very solid result for Europe’s largest specialist access company, substantial changes in the way that it runs its business have continued to come into operation during 2012 and should play a larger role in 2013, as long as the company can maintain its declared aims of improving rental rates, while improving efficiency and strengthening the fleet.

It should now also be seeing the benefits of its new/improved in-house designed IT system, in the UK, which is intended to help staff improve overall rental yields and transport efficiencies as well as allowing them to be more responsive and informative when talking to customers. As long as the company remains solidly focused on positive competitiveness, helping expand what is still a far from mature market, it will have an even better year in 2013.

As the new system and other measures are rolled out across the group, the trend should continue to improve throughout the year and into 2014, with plenty of upside potential in markets like Germany etc... before the group needs to look at more adventurous growth opportunities.

All in all a very positive performance