Lavendon to downsize in problem markets
04 March 2011
Lavendon Group said it will focus its activities on markets where it can have market leading positions and will downscale its activities where the economic outlook is less attractive.
The company did not give details of which of its operations will be affected by the new strategy, although the results for last year show that Spain remains its most depressed market. Its Middle East business is the most profitable, followed by Belgium and the UK.
"We will focus our capital deployment into geographic areas with the potential for strong and sustainable organic growth, and where we have, or can achieve through organic growth, market leadership," said the company, "Where the economic outlook for markets is less attractive, we will look to downscale our activities."
Lavendon reported revenues of £225.4 million for the year, marginally down on the 2009 figure, with pre-tax profits of £13.1 million. There were no exceptional charges last year in contrast to 2009 when Lavendon reported restructuring charges of £52.3 million.
Kevin Appleton, chief executive of Lavendon Group, said; "Trading in 2010 remained challenging with the continuation of the cyclical market slowdown. We did however see an improvement across the majority of the Group's operations in the second half which enabled the Group to deliver results in line with market expectations."
The UK and France were the only Lavendon businesses to report growth in 2010, with modest revenue decreases in all other countries. Lavendon said the fall in revenues in the Middle East, from £32.1 million in 2009 to £29.5 million, was the most disappointing, even if profit margins remained healthy at 29.2%. Lavendon said declines in Dubai explained the fall.
The company continues to be cautious in its fleet investment. Last year its gross expenditure on fleet was £14.7 million, almost entirely funded by the sale of 3000 units of its fleet that generated £14.0 million. In 2011 net CapEx will be £15.0 million.