10 Jul 2014 07:00
10 July 2014
Lavendon Group plc
First Half Trading Update
Revenue Growth Driving Improved Profitability
Lavendon Group plc ("Lavendon" or the "Group"), the market leader in the rental of powered access equipment in Europe and the Middle East, today issues the following trading update for the six months ended 30 June 2014:
Summary
· Board increasingly confident of delivering its expectations for the year
· Rental revenues increased by 7% in first six months of the year
· Strong rental revenue growth in key UK and Middle East businesses
· Revenue growth driving improved profitability, margins and ROCE
· Investment programme comfortably covered by cash flow
The Group's total revenue for the six months ended 30 June 2014, on a constant currency basis and excluding ex-fleet equipment sales, increased by 6% compared with the prior year, with rental revenues increasing by 7%. This year on year growth reflects both an improvement in the Group's underlying trading and the relatively weak first quarter comparators due to the previous year's adverse winter weather. In the second quarter, Group total revenues increased by 5% while rental revenues increased by 6% on the same basis. On an actual exchange rate basis, the Group's total revenue and rental revenues for the six months ended 30 June 2014, excluding ex-fleet equipment sales, increased by 4% compared with the prior year.
The rental revenue growth rates across the Group's business units, on a constant currency basis, for the last six months by quarter are given in the table below:
Territory |
Contribution to Total Group Rental Revenue |
Q1 2014 Rental Revenue Growth Y-O-Y |
Q2 2014 Rental Revenue Growth Y-O-Y |
H1 2014 Rental Revenue Growth Y-O-Y |
UK | 47% | 10% | 11% | 11% |
Germany | 17% | (3)% | (9)% | (7)% |
France | 9% | 9% | 7% | 8% |
Belgium | 6% | 4% | (9)% | (3)% |
Middle East | 21% | 13% | 13% | 13% |
Group Rental Revenue | 100% | 8% | 6% | 7% |
Percentages shown are on a constant currency basis and are rental revenues only (excluding revenues
from the sale of new and ex-fleet equipment)
Our European business showed good overall growth in the second quarter, with strong progress in both the UK and France, despite more challenging comparators. In particular, volumes for the UK business remained consistently ahead of the prior year with a more favourable mix and further pricing improvements secured. In Germany and Belgium, volumes were relatively weak and while the pricing environment in Germany is showing signs of stabilising, Belgium has seen pricing pressures increase in the quarter.
The rate of revenue growth in the Middle East was consistent with that seen in the first quarter but against stronger comparators. This revenue growth was driven by both volume increases and further pricing improvements. The market outlook for the region continues to be positive, and we are currently allocating additional capital into the region as previously planned.
The growth in Group revenue across the first half of the year has driven improved profitability, operating margins and ROCE, despite the increased exchange rate headwinds on our overseas earnings. The Board's primary focus remains on improving the Group's ROCE above our average weighted cost of capital across the business cycle and we are confident of making further progress towards this objective in 2014.
As expected, the Group's net debt level at 30 June 2014 increased to £102 million, on a constant currency basis relative to the £97 million at the 2013 year-end. At actual exchange rates, after reflecting a favorable foreign exchange movement on our Euro denominated debt, the Group's reported net debt position at 30 June 2014 was £99 million. Our planned investment programme for 2014 will be comfortably funded from our annual cash flows, and the Board continues to expect the Group's year-end net debt level to be broadly in line with that at 31 December 2013."
Don Kenny, Chief Executive of Lavendon, commented:
"The Group's performance in the first half of the year is encouraging, with particularly strong revenue growth from our key UK and Middle East businesses. We are now consistently delivering growth in overall revenues which is driving improvements in both profitability and margins. Whilst recognising the continuing economic uncertainties in our Continental European markets, the Board is increasingly confident of delivering on its expectations for 2014."
Ends
Conference call
A conference call will be held for analysts at 8.00am (UK time) today (10 July 2014), the details of which can be obtained from FTI Consulting. A replay of the call will be available on the company's website after the event at www.lavendongroup.com.
Next Update
Lavendon will announce its Interim Results for the six months ending 30 June 2014 on Friday 29 August 2014
For further information, please contact:
Lavendon | ||
Don Kenny, Chief Executive Today T: +44 (0)203 727 1000 Alan Merrell, Group Finance Director Thereafter T: +44 (0)1455 206 736 | ||
FTI Consulting | ||
Jonathon Brill Tel T: +44 (0)203 727 1000 George Parker |
Notes to Editors
Lavendon is the European and Middle East market leader in the rental of powered access equipment. The quality of diversity of its hire fleet, coupled with the professionalism and accessibility of its depot network, provides an exceptional product range for customers.
Powered access equipment is designed to enable people to work safely, productively and comfortably at height. It can be used in a comprehensive range of applications, both inside and outside buildings and structures.
The Group has operations in the United Kingdom, Germany, Belgium, France, Bahrain, Kuwait, India, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The equipment fleet totals over 20,000 units and the Group employs over 1,650 people.