14 Nov 2013 07:00
14 November 2013
Lavendon Group plc
Interim Management Statement
Board Confident of its Full Year Profit 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 interim management statement for the year to date:
Summary
· Confident of delivering Board's profit expectations for the year
· Improving trend in Group revenue growth with Q3 up 2%
· Strong rental revenue growth in the Middle East and France, together with an improving trend in other markets
· Annualised operational efficiency gains of at least £5 million will be delivered by end of 2013
The Group's total revenue for the nine months ended 30 September 2013, on a constant currency basis and excluding ex-fleet equipment sales, remained in line with the prior year, whilst rental revenues increased by 1% compared to 2012. This overall growth rate continued through to October 2013. In the third quarter, both Group total and rental revenues increased by 2% compared to 2012.
The rental revenue growth rates across the Group's markets for the first three quarters of the year, together with year to date growth rates as at 30 September 2013 and 31 October 2013, are given below:
Territory |
Contribution to Total Group Rental Revenue |
Q1 2013 Rental Revenue Growth Y-O-Y |
Q2 2013 Rental Revenue Growth Y-O-Y |
Q3 2013 Rental Revenue Growth Y-O-Y | 9 months to 30 Sept 2013 Rental Revenue Growth Y-O-Y | 10 months to 30 Oct 2013 Rental Revenue Growth Y-O-Y |
UK | 46% | (7)% | (6)% | (4)% | (6)% | (5)% |
Germany | 20% | (12)% | (1)% | 0% | (4)% | (5)% |
Belgium | 6% | (12)% | (10)% | (2)% | (8)% | (8)% |
France | 9% | 2% | 10% | 10% | 8% | 8% |
Middle East | 19% | 34% | 26% | 20% | 26% | 25% |
Group | 100% | (2)% | 1% | 2% | 1% | 1% |
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 businesses (including the UK) have continued to show improving revenue trends in the third quarter, with France in particular performing strongly. The UK's revenue performance improved in the third quarter, with volumes consistently ahead of the prior year and pricing showing signs of increasing towards the end of the period. However, revenues continue to reflect a shift in the mix of fleet on hire towards smaller units thereby lowering the overall revenue and margin per hire. We have recently taken steps to strengthen the UK's organisational structure and management team to ensure the business is well positioned to continue its improving revenue trend into 2014.
In the Middle East, despite increasingly more difficult comparators, revenue growth continues to be strong, driven by robust demand and supported by additional fleet investment over the year. The overall market outlook for the region continues to be very positive, although the recent more onerous regulatory environment in parts of the region may cause some slowdown in the progress of projects while the market adjusts to these requirements.
Whilst overall Group revenues and profits are improving, the Group's return on capital employed (ROCE) in 2013 is expected to be marginally below the 10.7% reported for 2012. This is principally due to the decline in the UK's relative contribution to the Group's overall ROCE performance. Measures are already being taken to address this and we remain confident that, over the business cycle, we will deliver a ROCE for the Group greater than our average weighted cost of capital.
The Group's net debt level at 30 September 2013 increased to £107 million, on a constant currency basis relative to the 2012 year end (FY2012: £97 million). At actual exchange rates, the Group's reported net debt position at 30 September 2013 was £109 million. The planned investment programme for 2013 is being funded from our annual cash flows, and the Board expects the Group's year end net debt level to be broadly in line with the net debt of £97 million as at 31 December 2012.
Don Kenny, Chief Executive of Lavendon, commented:
"The continued strong revenue growth seen in our French and Middle East businesses, together with the improving trends seen in our other markets, has enabled the Group to increase its rate of growth in the third quarter. The Group's ROCE is expected to be marginally below the 10.7% reported in 2012, but we are already taking measures to address this and remain confident that, over the business cycle, we will deliver a ROCE for the Group greater than our average weighted cost of capital. Whilst we note the continuing economic uncertainties in our European markets, the Board remains confident of delivering its profit expectations for the year."
Ends
Conference call
A conference call will be held for analysts at 8.00am (UK time) today (14 November 2013), 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 issue a pre-close trading update in January 2014.
For further information, please contact:
Lavendon | ||
Don Kenny, Chief Executive Today T: +44 (0)207 831 3113 Alan Merrell, Group Finance Director Thereafter T: +44 (0)1455 206 736 | ||
FTI Consulting | ||
Jonathon Brill T: +44 (0)207 831 3113 Alex Beagley |
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 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, India, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The equipment fleet totals over 20,000 units and the Group employs almost 1,650 people.