Mixed year for Lavendon ends in 4% growth
By Euan Youdale15 January 2013
Lavendon Group ended its 2012 financial year with a revenue increase of 4%, but it was the expanding Middle East market that helped stabilise the figures against flat growth in the UK and a decline in Germany.
The group’s UK business, which contributes 48% of total revenue, saw the fourth quarter recover from the 3% decline seen in the previous quarter, bringing UK revenue growth for the year ended 31 December 2012 to a flat 0%.
Revenues in the group's second biggest territory Germany showed a year-on-year decline, down 10%, during the fourth quarter, leading to a 6% decline overall. “We continued to see the previously reported slower shift in the mix of fleet on hire in a relatively weak market,” said a company spokesman.
Belgium and France increased revenues overall in the year, with France delivering a strong 17% revenue growth. However, the fourth quarter saw a decline of 4% in Belgium, bringing the country’s growth to 1% for the year. “Volumes reduced in the lead up to the Christmas holiday period at a faster rate than is traditionally seen, and this coupled with some pricing pressure resulted in revenues declining in the fourth quarter,” explained the spokesman.
Revenue growth continued to accelerate across the Middle East, said the company, particularly in Saudi Arabia, which was supported by fleet investment in the fourth quarter. While the region contributes a relatively small 15% of total group revenue, it saw 35% year-on-year growth. “Our Middle East business has grown in relative importance to the group during the year, and we expect this to continue during 2013 given the encouraging market outlook and our plans to direct further investment into the region,” said the spokesman.
In response to its overall position the group has, this year, reduced the level of capital in Germany through the disposal of surplus fleet and is starting to redeploy or dispose of surplus fleet from its Belgian market. “We have continued to invest additional capital into the Middle East, partly funded from the release of capital in Germany, to support the growing demand and benefit from the attractive returns available from that region,” added the spokesman.
Don Kenny, Lavendon Group plc chief executive, concluded. “The group has continued to make good progress in 2012, despite the challenging trading conditions in many of our European markets. The encouraging growth we are seeing in our French and Middle East businesses, together with the actions we have taken to improve our overall operational and capital efficiencies are delivering improvements in the Group's profitability, margins and return on capital employed (ROCE).
"The Board therefore expects the group's results for 2012 to be at the upper end of its expectations, and looks forward to making further progress in 2013.”