Lavendon promises flat first half as Middle East shines

11th Jul 2013 08:46

Equipment rental group Lavendon needed strong revenue growth from its French and Middle East businesses to counteract weakness elsewhere during the first half of the year.Group turnover was flat for the period, as decline in the first quarter was arrested with a return to growth in the second.While volumes at the core UK segment were broadly in line with the prior year, the group had to lower its prices in order to maintain market share.However, UK and wider European revenues improved during the second quarter as the weather brightened, but UK and Germany fell 6% and Belgium 11% over the period. But the group's geographic diversity was lauded by Chief Executive Don Kenny, as French and particularly the Middle East businesses drove strong revenue growth."Whilst ever mindful of the continuing economic uncertainties in our European markets, the board remains confident of delivering its expectations for the year," he said.Driven by robust demand and supported with additional fleet investment over the first half, revenue growth in the Middle East surged 30% despite increasingly more difficult comparators from the prior year. Lavendon said the market outlook for the region remained encouraging and the acceleration of its planned programme of investing additional capital into the region is "delivering the anticipated enhancement in performance".Kenny added that the group's actions to improve operational efficiency and deliver an annualised benefit of £5m by the end of 2013 remained on track."Our margins and profitability have continued to improve in the period, ensuring we are well placed to demonstrate further progress in our key objective of increasing our return on capital employed during 2013." As expected, net debt increased £7m to £104m from Middle East equipment purchases, but the board reiterated that its planned investment programme was being funded from annual cash flows and it expected year-end levels to return to £97m. Shares in Lavendon were up 0.8% to 161.75p at 09:00 on Thursday.OH