Powered access rental company Lavendon is to accelerate its fleet investment programme with £20 million (€27 million) originally earmarked for next year now to be spent in 2015. Much of the extra cash will be spend on its fleets in the UK, France and the Middle East.
The capital expenditure announcement, made as part of the results covering the six months to 30 June, confirmed a similar statement of intent originally included in the group’s provisional results released last month. Total capital expenditure for the year will now be £85 million (€116 million) gross and £75 million (€102 million) net.
Chief executive Don Kenny said: “We are allocating an additional £20 million of capital in 2015, increasing the level of fleet investment in the Middle East, UK and France to add capacity in support of our growth plans.
"Our strong financial position enables us to accelerate our investment plans in response to customer demand and we will continue to use our operational flexibility to build momentum and scale.”
Half of the additional expenditure will go to the Middle East, where Lavendon expects the market to grow at around 9% a year to reach a value of US$307 million (€273 million) by 2018. Of the balance, £7 million (€9.6 million) being invested in the UK and £3 million (€4.1 million) in Belgium, France and Germany combined. Lavendon said it expected its UK and continental Europe an operations to grow annually by 3.7% and 2% respectively in the next three years.
The group, which currently operates a fleet just under 20000-strong, said it expects to finance the purchase of around 3000 new units with the investment. This will bring down the average age of the fleet, which at June 2015 stood at an average of 7.2 years and ranged from 6.2 in the UK and France to 9.6 in the Middle East. Average utilisation across the group for the half-year was 64%, with the highest figure of 72% being in the Middle East.
Lavendon - which employs nearly 1700 people across four European locations and six in the Middle East - increased its first half underlying post-tax profit year on year by 18% despite posting a rise in revenues of just 1% in the same period.
Rental revenues remained unchanged, contributing £112 million (€153 million) of the group’s £119 million (€162 million) total. The group reported strong growth in France and a return to growth in Germany.
Mr Kenny added: “Trading since the half year has remained in line with our expectations and, whilst mindful of the re-emergence of some uncertainty in the economic outlook, the board remains confident that the group is well positioned to deliver its expectations for 2015.”