Lavendon reports improved trading
By Maria Hadlow16 November 2010
Access rental specialist the Lavendon Group, has reported an improved trading performance in the third quarter and into the fourth quarter.
In an interim management statement to 15 November 2010 the company said, "Group revenues in the four months since the half-year, excluding ex-fleet equipment sales, increased by 3% over the same period last year, reducing the rate of revenue decline for the ten months ended 31 October 2010 to 4% compared to the same period last year."
The Lavendon Group says it has generated strong cash flows during the period and net debt levels have continued to reduce in line with its plans. On 31 October 2010, net debt stood at £150.8 million (a reduction of £16.8 million since 30 June 2010). However, the weakening of the exchange rate of Sterling against the Euro has partially offset the debt reduction making the actual figure £158.1 million. The Group remains fully compliant with its banking covenants and expects net debt to reduce further by the year-end.
Revenues in the UK, which make up 47% of Group revenues in 2009 have grown 5% in the four months since the half-year over the same period last year, reducing the ten-month revenue decline over 2009 to 2%. Volume levels continue to be above those of last year and the company says it is making positive progress on pricing improvement.
The rate of year on year revenue decline in Germany (23% of Group revenues in 2009) has slowed to 8% for the ten-month period, following the four months since the half-year where revenues were 1% down on the same period last year. It is expected that further progress will be made in reducing the rate of year on year decline in revenues as demand from the telecommunications and services sectors partially offsets continuing weakness in construction activity.
In the Middle East (15% of Group revenues in 2009), rental revenues have fallen by 9% for the ten-month period, with total revenues, including sales of new equipment, falling by 10% over 2009. Revenues for the four months since the half-year, as a result of the timing of Ramadan, saw a decline in rental and total revenues of 9% and 12% respectively. Activity levels have now returned to pre Ramadan levels.
Both France and Belgium (11% of Group revenues in 2009) reported revenue growth for the ten-month period, with combined revenues having increased by 14% compared to 2009. Since the half-year, combined revenues for the four months have increased by 23% over the same period last year. The French operation has been making good progress in expanding its market share.
Spanish revenues (4% of Group revenues in 2009) declined by 19% in the first ten months compared to the prior year, following the four months since the half-year where revenues reduced by 12% over the same period last year. Against a market environment that continues to be very difficult, Lavendon says that the business has remained broadly breakeven and is generating positive cash flow.
On 30 September, John Standen was appointed chairman of the Lavendon Group and the company is in the process of appointing two additional non-executive directors broaden and strengthen the Board's range of skills and experience.
The Lavendon Group is also reviewing its business in order to identify and prioritise performance improvement opportunities. It says, "This review will help shape the future strategy and investment programme of the Group for the coming years. We will update shareholders on progress when we announce our preliminary results for the year ending 31 December 2010 in March 2011."