Strong start in first quarter for Lavendon
By Euan Youdale17 April 2014
Lavendon Group had a strong start to the year and is confident it will meet expectations for the full 12 months, the company said in an interim management statement.
The period covers the first quarter of 2014 to date shows a rental revenue increase of 8%, and an overall increase of 7% compared to the same period last year.
Europe saw good overall growth, particularly the UK with a 10% increase, representing 47% of total group revenue. Revenue grew 9% in France and 4% in Belgium. The two countries represent 9% and 6% of the business, respectively.
Germany was the only country in which the group operates to see a decline in revenues. The 3% drop was the result of competitive pricing, said Lavendon, although volumes were up on the same period last year. Germany represents 17% of company revenue.
Outside Europe, the group’s Middle East business continues to grow, with a 13% revenue increase, representing 21% of the business. “Revenue growth regained momentum during the quarter, despite stronger comparators, driven both by volume and pricing increases. The market outlook for the region continues to be positive and we will allocate, as planned, additional capital into the region in the coming months,” said a company spokesperson.
The group’s primary focus remains on improving its return on capital employed (ROCE) above its average weighted cost of capital across the business.
As expected, the group's net debt level increased to £109 million by 31 March, on a constant currency basis relative to the £97 million at the 2013 year-end. This was due to the planned purchase of additional equipment to support growth and payments owed to equipment suppliers from the previous year-end. At actual exchange rates debt was £108 million.
Lavendon’s planned investment programme for 2014 will be funded from its cash flows and it expects year-end net debt level to be broadly the same as last year.
Don Kenny, chief executive of Lavendon, concluded, "The Group's first quarter performance was encouraging, with an underlying trading improvement being seen across nearly all our markets. In particular, the revenue growth in the UK, France and the Middle East has been strong, driving improvements in our profitability and margins. Whilst recognising the continuing economic uncertainties in our European markets, the board is confident of making further progress during the year and delivering its expectations for 2014."