03.09.2007

Lavendon profits leap

The Lavendon Group has announced record results for the first half with revenues of £83.3 million, an increase of 46 percent on 2006.

Operating profits jumped by 252 percent to £11.6 million, while profit before tax leapt by a massive 654 percent to £8.3 million from £1.1 million last year .

The company also generated £18.0 million in cash, an increase of 76 percent on 2006. With a strong July and August the company is raising its full year expectations.

UK

Revenues for the UK Group which now operates a fleet of over 10,000 aerial lifts, increased by 27 percent to £47.1 million. 11 percent of which was organic – like-for-like growth. The balance being from acquisitions.

Operating profits jumped by 48 percent to £6.9 million, with all businesses contributing to the margin improvement from 12.6 percent to 14.7 percent of sales.

Germany

Lavendon now runs 4,500 units in Germany, through its Zooom and Gardemann businesses. Revenues increased by 131 percent to £22.7 million, 17 percent of which came from Zooom and the balance due to the contribution of the Gardemann acquisition, which was completed in December 2006.

The benefit of the improving market and the acquisition produced an operating profit of £2.3 million compared to a loss of £2.1 million last year. Zooom still posted red numbers of -£700,000 while Gardemann made a profit of £3 million.

France

Zooom France continues to struggle with revenues down seven percent to £3.2 million, while operating losses improved to £300,000 compared to a £500,000 loss in 2006.

Spain

Revenues at Zooom Spain improved by 29 percent to £2.6 million, quadrupling its operating income to £400,000.


Middle East

The Middle East, the star of the group when its European businesses were struggling a couple of years back, is still growing rapidly with revenues up by 70 percent to £7.9 million. Most of the growth coming outside of its UAE base.

Operating profits, depressed last year thanks to a large fleet increase, were up by 85 percent to £2.3 million, boosted by strong equipment sales. The improvement would have been stronger had it not been for a seven percent negative currency factor.


See Lavendon releases trading statement

John Gordon, group chairman, said:

"We have had an excellent first half. We have continued to implement our strategy which has enabled us to improve performance ahead of our expectations and strengthen our position in all our geographical markets.

"We will continue to develop our UK group to ensure we maximise the opportunities that the current market presents, while focusing on further enhancing the performance of our German business and keeping apace with the growth in the Middle East.

We are actively seeking further acquisition opportunities that are cash generative and either complement our existing operations or provide entry into other market sectors.”

Vertikal Comment

This is a tremendous set of results no matter how you look at them, Lavendon is on a roll. Full year revenues could easily exceed £190 million which is exceptional for a European specialist rental business.

The first half numbers suggest that the group has successfully integrated and settled its acquisitions, in spite of a high level of activity over the past nine months.

Expect to see further acquisitions, both in the UK and overseas.

The company needs to make a move in France and Spain, and a Gardemann level acquisition would most likely the way to go. The challenge will be to find the right candidate.