14 Jan 2016 07:00
14 January 2016
Lavendon Group plc
Full Year Trading Update 2015
Board Expects 2015 Results to be at the Top End of Market Expectations
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 year ended 31 December 2015:
Summary
· Board expects 2015 results to be at the top end of market expectations
· Profitability, margins and return on capital employed (ROCE) continue to improve
· Strong rental revenue growth continued in Middle East & France
· UK rental revenue performance improved across the year
· Net debt at £119m reflecting accelerated fleet investment in the year
The Group's total revenue for the year ended 31 December 2015, on a constant currency basis and excluding ex-fleet equipment sales, increased by 3% compared with the prior year, with rental revenues increasing by 2%. The quarterly rental revenue growth rates across the Group's territories for 2015 are given below:
Territory | % of Total Group Rental Revenue | Q1 2015 Rental Revenue Growth Y-O-Y | Q2 2015 Rental Revenue Growth Y-O-Y | Q3 2015 Rental Revenue Growth Y-O-Y | Q4 2015 Rental Revenue Growth Y-O-Y | 2015 Rental Revenue Growth Y-O-Y |
UK | 46% | (3)% | (1)% | 0% | 1% | (1)% |
Middle East | 22% | 11% | 6% | 3% | 10% | 7% |
Continental Europe | 32% | 0% | 4% | 2% | 7% | 3% |
Group Rental Revenue | 100% | 1% | 2% | 1% | 5% | 2% |
Percentages shown are on a constant currency basis and are rental revenues only (excluding revenues from the sale of new and ex-fleet equipment)
The UK returned to year on year revenue growth in Q4. A continued focus on service differentiation drove a more favorable mix of machines on hire, with broadly stable pricing, that more than absorbed the impact of lower year on year volumes in the final quarter.
The rate of revenue growth in the Middle East accelerated in Q4, driven by increased utilisation of an enlarged fleet and despite more demanding comparatives. As previously reported, this growth has been driven from the region as a whole (particularly Qatar and the UAE) and has continued to more than absorb the increased pricing pressure seen in the Saudi Arabian market to date. Whilst cognisant of the changing political and economic climate within the region, the overall current outlook for our business remains positive. Any further allocation of capital to support our business will be undertaken in a controlled manner, recognising the returns required, so that we retain flexibility to respond accordingly to changes in market conditions.
Rental revenues in Continental Europe demonstrated strong growth in Q4, as increased volumes continued to drive revenue growth in France (+13%) and Belgium (+11%), whilst also returning Germany to year on year growth (+3%).
In summary, the growth in overall Group revenues and continued operational improvements during 2015 have driven further year on year progress in the Group's profitability and margins. The Group's ROCE has improved and remains firmly above the Group's weighted average cost of capital, albeit with the rate of year on year progress being tempered by the previously announced accelerated fleet investment of £20 million in the final months of the year.
As expected, the Group's net debt level at 31 December 2015 increased to £124 million, on a constant currency basis, relative to £90 million at 31 December 2014. At actual exchange rates, the Group's reported net debt position at 31 December 2015 was £119 million.
Don Kenny, Chief Executive of Lavendon, commented:
"The Group has delivered an improved year on year performance, with growth in revenues and further operational efficiencies driving increases in profitability, margins and ROCE. The Board expects the Group's results for 2015 to be at the top end of market expectations.
As we move into 2016, whilst recognising the recent increase in uncertainty of the economic outlook, we are looking forward to building on the momentum we have developed during the past few years and to making further progress in the year ahead."
Ends
Conference call
A conference call will be held for analysts at 8.00am (UK time) today (14 January 2016), 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 preliminary results for 2015 on 25 February 2016
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 206736 | ||
FTI Consulting | ||
Jonathon Brill T: +44 (0)203 727 1000 Adam Cubbage James Styles |
Notes to Editors
Lavendon is the European and Middle East market leader in the rental of powered access equipment. The quality and diversity of its hire fleet, coupled with the professionalism of its workforce and the accessibility of its depot network, provides an exceptional product range and specialist offering for its 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, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The equipment rental fleet totals over 21,000 units and the Group employs almost 1,700 people.