16.07.2015

Lavendon improvement continues

Lavendon group the owner of Nationwide Platforms, Rapid Access, Gardemann and DK Rental has issued a positive half-year trading statement.

Overall the group saw rental revenues improve two percent in the quarter and one percent year to date.

The growth was largely down to the Rapid in the Middle East and Lavendon France, although Gardemann in Germany also returned to rental growth in the second quarter. While DK Rental continues to decline, the UK - still 47 percent of the group’s total revenues - improved over the first quarter but was still slightly down on last year.

Specifically, the UK was down one percent in the quarter and two percent year to date, the Middle East improved six percent in the quarter and eight percent for the six months. Continental Europe – Belgium, Germany and France – improved four percent in the quarter and two percent for the half year.

In the UK, the gradual improvement in revenues was driven by a more favourable mix of machines on hire and better pricing, compensating for lower year on year volumes. The result has boosted profitability.

Higher volumes in the Middle East also boosted profitability, the company says that the overall outlook for the region remains positive and the company is investing in further growth.

The company is now lumping Belgium, Germany and France together as Continental Europe, which overall was up four percent in the quarter and two percent for the first half. For the six months France led the way up 14 percent, while Germany saw rental increases of two percent and Belgium declined seven percent.

With stronger margins and profitability the group has revised its investment plans and will bring around £20 million of capital expenditure forward from 2016, in order to bring additional equipment on line in the fourth quarter. Net debt at the end of June was up £14 million to £104 million.

Chief executive Don Kenny said: "The group's trading performance has progressively improved across the first half, with modest growth in overall group revenues and continuing operational improvements driving further increases in profitability and margins. The board remains confident of delivering further progress during the current year. Furthermore, to build on this momentum, we are accelerating the investment in our fleet over the final months of this year to ensure we are well placed to respond to improving market conditions as we move into 2016."

Vertikal Comment

This looks like a very decent overall performance from Lavendon, it appears to have continued to hold or even push rates up in markets where it has a leading position, such as the UK, and is beginning to see some pay back for this as demand increases and its restructuring plans settle down and bed in.

Germany seems to be finally on a good track although Belgium is clearly an issue that needs and is probably getting attention, but more on this and the results as a whole when the company publishes its full half year results.