17 Nov 2015 07:00
17 November 2015
Lavendon Group plc
Trading Update
Confident of Delivering Profit Expectations for the Year
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 nine months to 30 September 2015:
Summary
· Board remains confident of delivering its profit expectations for the year
· Profitability, margins and return on capital employed (ROCE) continue to improve
· Good rental revenue growth in Middle East & France
· Improving rental revenue performance in UK
· Delivery of previously announced accelerated fleet investment of £20m almost complete
The Group's total revenue for the nine months ended 30 September 2015, on a constant currency basis and excluding ex-fleet equipment sales, increased by 2% compared with the prior year, with rental revenues increasing by 1%. The rental revenue growth rates across the Group's territories for the first nine months of 2015 by quarter are given below:
Territory | Contribution to 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 | YTD 2015 Rental Revenue Growth Y-O-Y |
UK | 47% | (3)% | (1)% | 0% | (1)% |
Middle East | 22% | 11% | 6% | 3% | 7% |
Continental Europe | 31% | 0% | 4% | 2% | 2% |
Group Rental Revenue | 100% | 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)
In the UK, the gradual improvement in revenue performance has continued through the third quarter, with a focus on service differentiation driving a more favorable mix of machines on hire with stable pricing that has mitigated lower year on year volumes.
Consistently higher volumes in the Middle East have continued to drive growth in revenues, despite increasingly more demanding comparatives. This growth is now driven from the wider region and is proving more than sufficient to absorb the continued pricing pressure in the Saudi Arabian market. The overall outlook for the region remains positive and we have continued to allocate additional capital to expand our fleet in support of our growth strategy. As previously advised, this expansion will be undertaken in a controlled manner so that we retain flexibility to respond accordingly to changes in market conditions should they occur.
Rental revenues in Continental Europe showed consistent year on year growth across the third quarter, as increased volumes drove revenue growth in France (+3%) and returned Belgium to year on year revenue growth (+7%), which more than offset a small revenue decline in Germany (-1%).
In summary, the growth in overall Group revenues year to date and continued operational improvements have driven further 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 increased fleet investment of £20 million in the final months of this year.
As expected, the Group's net debt level at 30 September 2015 increased to £120 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 30 September 2015 was £116 million.
Don Kenny, Chief Executive of Lavendon, commented:
"The Group's trading performance in the first nine months of the year has improved across our markets, driving growth in revenues, profitability and margins. The Board remains confident of delivering on its profit expectations for 2015, and with the delivery of the accelerated fleet investment now almost complete, we are well positioned to respond to market opportunities as we move into 2016."
Ends
Conference call
A conference call will be held for analysts at 8.00am (UK time) today (17 November 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 issue a Full Year pre-close trading update in January 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 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, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The equipment rental fleet totals over 20,000 units and the Group employs over 1,600 people.