VP interims "very satisfactory' but forecasts slow UK recovery
By Murray Pollok30 November 2010
UK rental company Vp plc reported revenues of £71.1 million for the six months to 30 September, unchanged from the previous year, and operating profits down 12% to £9.9 million.
Jeremy Pilkington, chairman of Vp plc, described the results as "very satisfactory" and said that they "reinforce our confidence in the quality of our business model, which has demonstrated once again its ability to mitigate the impact of individual sector weaknesses through the diversity of the group's activities."
He said the business had experienced "a period of general stability over the last six months and this has continued since the end of the half year. We believe any recovery in the economy will be slow and that there will be further challenges along the way."
VP operates six rental divisions, the largest being the Hire Station tool hire network, where revenues were up by 2.3% to £26.2 million and profits down 15% to £1.7 million. VP said Hire Station faced a particularly challenging market, with revenues maintained but margins affected by price erosion.
The second largest business is the ground shoring division Groundforce, where revenues fell 10% to £15.6 million and profits were down 30% to £3.5 million. VP said work on the Olympics site in London and other public infrastructure work had helped to offset weakening private sector activity.
Groundforce is also investing in mainland Europe and said that this had "started to pay dividends with a number of large propping schemes secured."
The company's telehandler rental division, UK Forks, returned to profit after two very difficult years. Demand from the housing sector increased, and although revenues fell by 8% because of a smaller fleet, utilisation levels have recovered and Vp is again investing in its fleet. After the end of September Vp acquired 150 telehandlers from one its larger customers after signing a three year exclusive rental contract.
The company's compressed air business serving the oil and gas sector, Airpac Bukom, saw revenues grow by 5% to £8.5 million, with profits down 28% to £1.45 million. It said activities in Australia were building up and reported strong demand in Africa.
The railways related Torrent Trackside business saw a 20% increase in revenues thanks to "an improvement in revenues derived from our key customer relationships", and its temporary roadways business, TPA, which operates in the UK and Germany, saw revenues flat at £9.3 million.