Lavendon Group is reporting a successful nine months with rental revenues up 9%.
Breaking down the countries served by the group, the UK’s rental revenues were up 8% in the nine months ending 30 September, compared to the same period last year. Middle East increased by 20%, while continental Europe, including Germany, France and Belgium, saw rental revenues rise by 2%.
At actual exchange rates, the group’s total revenue, excluding ex-fleet equipment sales, for the nine months increased by 15% over the previous year.
In the UK, representing 47% of total group rental revenues, market share gains continued to drive strong growth combined with an improving pricing environment, said the company. Fleet utilisation levels reached 74% in the third quarter and have continued to improve, benefiting from the strategic investment made in 2015 to improve the scale and mix of the fleet.
The Middle East business, 25% of rental revenues, continued to deliver strong revenue growth, despite increasingly more difficult comparators, said the company with fleet utilisation levels now at 80%. “Revenue growth from our operations in the UAE, Kuwait, Oman and Qatar has continued to more than absorb a decline in our higher margin Saudi Arabian business.” The company has redirected CapEx to those markets with strong growth.
Rental revenues in Continental Europe, 28% of total revenue, was represented by an increase of 13% in France and 3% in Belgium, offsetting a weaker performance in Germany, which saw a 7% decrease. “The programme to restructure our German business is complete and the revised business structure is now operational. Whilst this restructuring process undoubtedly disrupted the ability of the German business to gain traction in terms of revenue, the business is now profitable year to date.”
The company added that while it remains too early to assess fully the economic implications of the UK's decision to leave the EU, it recognises the increased uncertainty in the macroeconomic outlook. ”However, we do believe the Group remains well positioned to manage this uncertainty, with over 50% of its revenues and profits being derived from outside the UK.
"As we are seeing in 2016, if there is a prolonged period of Sterling weakness, the Group's reported results benefit from the translational impact on its overseas earnings which may offer some mitigation should there be any adverse economic consequences on the Group arising from the UK's decision.”
Don Kenny, chief executive of Lavendon, commented, “The Board is encouraged by the trading performance to date, and as a consequence of the favourable translational impact on our overseas earnings from the continuing weakness of Sterling, we expect the Group's results to be marginally ahead of our original expectations for 2016."