14th Nov 2013 11:45
LONDON (Alliance News) - Lavendon Group PLC Thursday reported an uptick in revenues for the third quarter, boosted by particularly strong rental growth in the Middle East and France.
The company, which rents powered aerial work platforms in Europe and the Middle East, said it is confident in meeting profit expectations for the full year.
However, Lavendon said that while overall group revenues and profits are improving, its return on capital employed for the year, is expected to be marginally below the 10.7% figure it reported for 2012, due to the decline in the UK's relative contribution.
Lavendon said that it already has taken measures to address this, and is confident that it will deliver, over the business cycle, a return on capital employed that is greater than its average weighted cost of capital.
The group reported a 2% increase in group revenue for the quarter ended September 30 over the year before period, driven by strong rental revenue growth in the Middle East, France, and improving trends in European markets, including the UK.
Lavendon said that in the nine months to September 30, rental revenue rose 1% year-on-year, while total revenue for the nine-month period was flat, on a constant currency basis and excluding ex-fleet equipment sales.
UK rental revenue, which accounts for 46% of overall rental revenue, improved in the third quarter with signs of volumes and pricing increasing towards the end of the period, Lavendon said. However UK revenue still declined by 4%. It said the fall in revenue was partly due to a shift in the mix of fleet-on-hire towards smaller units, hence lowering the overall revenue and margin per hire.
Lavendon said that France delivered revenue growth of 10%, while the Middle East saw revenue rise by 20%, driven by robust demand and supported by additional fleet investment during the year.
It said that the overall market outlook for the Middle East remains positive, although a recent tightening of regulations in parts of the region may slow the progress of its projects there.
Shares in Lavendon were up 0.4% Thursday morning at 180.44 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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