Lavendon sees half year dip
By Euan Youdale12 July 2013
Lavendon’s revenues fell marginally over the first half of 2013 but the group forecasts growth for the whole year.
For the six months ending 30 June, revenues declined by 2% compared to same period in 2012, partly caused by adverse weather conditions in Europe, said the company, while revenues in the second quarter of 2013 increased by 1%.
The group’s operations in Belgium saw the biggest decline, with revenues down 11% over the half year and 10% in the second quarter. The UK declined by 6% in the first six months and second quarter, while Germany fared better with a 1% decline in the second quarter, but saw a 6% drop in the half year.
The results were buoyed by its operations in France and the Middle East. France experienced rises of 10% and 6% for the second quarter and half year, respectively, while the Middle East saw revenues rise by 26% and 30% in the same periods.
"The strong revenue growth seen in our French and Middle East businesses in the first half has offset the revenue weakness experienced in our other markets, illustrating the strength and benefit of the group's geographic diversity,” said Don Kenny, chief executive of Lavendon.
Actions to improve the group's operational efficiency means a forecasted annualised benefit of £5 million by the end of 2013 remains on track, said the company.
“Our margins and profitability have continued to improve in the period, ensuring we are well placed to demonstrate further progress in our key objective of increasing our return on capital employed during 2013," added Mr Kenny, "Whilst ever mindful of the continuing economic uncertainties in our European markets, the Board remains confident of delivering its expectations for the year."
The company said Europe had shown improved revenue trends in the second quarter, with Germany and France demonstrating considerable progress. “In the UK, revenues showed some improvement during the second quarter as weather conditions improved. However, the UK's relevant commercial and infrastructure construction sectors remain difficult markets, and whilst overall volumes are broadly in line with the prior year, this has been partly at the expense of pricing in order to maintain market share,” said a spokesman.
While the Middle East was the group’s strongest region, there are challenges. “There are increasingly more difficult comparators, driven by robust demand and supported with additional fleet investment over the first half of the year. The market outlook for the region remains encouraging and the acceleration of our planned programme of investing additional capital into the region is delivering the anticipated enhancement in performance.”
The group's net debt level at 30 June increased to £104 million, as expected, on a constant currency basis relative to the 2012 year-end figure of £97 million. This reflects the purchase of additional equipment to support growth in the Middle East, said the company, and payments due to equipment suppliers from the previous year-end. At actual exchange rates, the group's net debt at 30 June 2013 was £109 million.