Lavendon confident of weathering a flat 2010
By Murray Pollok03 March 2010
Lavendon Group said it did not expect further significant deterioration in its markets in 2010 although neither is it forecasting any material improvement. The company reported a £47.8 million pre-tax loss for the full-year 2009 - including exception items of £58.2 million - on revenues that were 13% down at £226.9 million.
The company said its cost cutting - £17 million in the year - and its ability to continue to age its fleet meant that it was well placed to profit when recovery eventually comes.
Kevin Appleton, Lavendon's chief executive, said the company had performed in line with expectations in an extremely challenging year; "With sharply declining revenues, we have mitigated the impact on underlying profitability by accelerating business integration and cost reduction measures....We believe therefore that we are well placed to trade confidently through the remainder of the current downturn in our industry.
"Whilst we do not anticipate any material recovery in our markets in 2010, we do believe that further significant deterioration is increasingly less likely and that we are well placed for profitable growth when the markets recover."
Operating profit before the exceptional charges was £31.1 million and the company generated £76.7 million in cash during the year. The exceptional items comprised £9.6 million costs for the restructuring of the Group's European businesses, £30.8 million impairment charges on goodwill and intangible assets, and asset write-downs of £11.9 million.
The company said it will spend just £10 million (net of used fleet sales) in 2010 and that the 61 month average age of its fleet gave it "considerable scope to limit capital expenditure requirements for some time".
UK revenues fell 23% to £106.4 million, although on a like-for-like basis - assuming a full year of revenue in 2008 from The Platform Company - revenues fell by around 28%. The 2012 London Olympics site has so far contributed "marginally" to revenues, although Lavendon expects this to increase sharply this year.
Revenues in Germany were down 16% (in local currency) to £55.2 million. Lavendon reduced its employees in the country by 15% during the year. In Belgium, Euro revenues fell by 24% to £14.4 million, and the French business saw a more modest decline of 16% to £12.4 million.
The company's Spanish business suffered a 41% fall in revenues to £9.4 million, with the business now focused on three large depots in Madrid, Barcelona and Girona.
Middle East revenues increased by 39% to £32.1 million, with rental revenues rising by 48% to £28.3 million. The business has continued to grow its fleet during the year in anticipation of demand increases, and now operates over 1600 rental units from six depots.