15 Jan 2015 07:00
15 January 2015
Lavendon Group plc
Full Year Trading Update 2014
Board Expects Results to be at Top End of Expectations for 2014
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 2014:
Summary
· Board expects results to be at the top end of its expectations for 2014
· Rental revenues increased by 6%, with strong growth in UK, Middle East and French businesses
· Revenue growth driving improved profitability, margins and ROCE despite strong FX headwinds
· ROCE improved in second half and moved ahead of WACC for the Full Year
· German business returned to revenue growth in Q4
· Net debt reduced as investment programme fully funded by operating cash flow
The Group's total and rental revenues for the year ended 31 December 2014, on a constant currency basis and excluding ex-fleet equipment sales, increased by 6% compared with the prior year (3% at actual exchange rates). The rental revenue growth rates across the Group's business units, on a constant currency basis, by quarter and for the year are shown in the table below:
Territory |
% of Total Group Rental Revenue |
Q1 2014 Rental Revenue Growth Y-O-Y |
Q2 2014 Rental Revenue Growth Y-O-Y |
Q3 2014 Rental Revenue Growth Y-O-Y |
Q4 2014 Rental Revenue Growth Y-O-Y |
2014 Rental Revenue Growth Y-O-Y |
UK | 47% | 10% | 11% | 8% | 1% | 7% |
Middle East | 21% | 13% | 13% | 15% | 20% | 15% |
Germany | 18% | (3)% | (9)% | (2)% | 3% | (3)% |
France | 10% | 9% | 7% | 9% | 8% | 8% |
Belgium | 4% | 4% | (9)% | (21)% | (23%) | (13)% |
Group Rental Revenue | 100% | 8% | 6% | 6% | 4% | 6% |
Percentages shown are on a constant currency basis and are rental revenues only (excluding revenues from the sale of new
and ex-fleet equipment)
In the UK, the trend of improving pricing and a more favorable machine mix continued, absorbing the expected lower volumes and producing a revenue growth of 1% for the fourth quarter. This revenue growth together with further operational efficiencies has continued to drive margin improvements during the quarter, and for the year as a whole, despite increasingly challenging comparators.
The rate of revenue growth in the Middle East business, despite stronger comparators, increased to 20% during the fourth quarter and was principally driven by further increases in volumes. The market outlook for our business continues to be positive and we are deploying additional capital into the region as we move through the first half of 2015.
As widely reported, economic conditions within our Continental Europe markets remain generally difficult. However, our German business returned to revenue growth in the final quarter, albeit against relatively weak comparators, and our French business has delivered another quarter of strong revenue growth. Our Belgian revenues have declined since the second quarter of the year compared to the prior year, following the completion of a major project in the first quarter of 2014 that had been underway through most of 2013.
The growth in overall Group revenue across the year has driven improved profitability, operating margins and ROCE, despite the strong exchange rate headwinds on our overseas earnings. The Board's primary strategic aim has remained on delivering a Group ROCE above its average weighted cost of capital (WACC) across the business cycle, and we are pleased to report that our ROCE improved in the second half and has moved ahead of WACC for the full year.
The Group's net debt at 31 December 2014 reduced to £95 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 31 December 2014 was £90 million.
Don Kenny, Chief Executive of Lavendon, commented:
"The Group performed well in 2014, with strong revenue growth in our UK, Middle East and French businesses driving improvements in our profitability and margins. This performance has been delivered despite exchange rate headwinds on our overseas earnings and the continued economic weakness in our Continental European markets."
"The Board expects the Group's results for 2014 to be at the top of its expectations, and in particular will report that the Group's ROCE has moved ahead of its WACC for the year. As we move into 2015, we are looking forward to building on the momentum that we have developed during the past 12 months and making further progress in the year ahead."
Ends
Conference call
A conference call will be held for analysts at 8.00am (UK time) today (15 January 2015), 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 2014 on 26 February 2015.
For further information, please contact:
Lavendon | ||
Don Kenny, Chief Executive Tel T: +44 (0)1455 206736 Alan Merrell, Group Finance Director | ||
FTI Consulting | ||
Jonathon Brill Tel T: +44 (0)203 727 1000 Alex Beagley 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.