Lavendon to spend £15m on new kit

Grant Prior 13 years ago
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Lavendon is planning to spend £15m on new kit this year as rental rates continue to rise as the market shows signs of recovery.

External auditors have been working at the firm on a new strategy which will see Lavendon focus on the commercial, transport and technical sectors.

In the UK, turnover increased 5% to £112m last year with rental revenues remaining flat as sales of new and used equipment doubled.

Demand picked up during the year following a slow start to 2010.

The firm said: “Through the year rental demand progressively increased, from both major and smaller accounts, and the UK produced year-on-year revenue growth for the second half of the year of 5%.

“Demand from non-construction customers continued to out-perform the construction sector, although construction revenues moved into year-on-year growth across the second half of 2010.”

Lavendon said rental rates improved as the year went on with discount levels improving by 7% by the end of 2010.

The results statement added: “Although pricing pressures have squeezed margins, particularly in the first half of the year, cost savings initiatives taken in 2009 and close management of operating costs during the year enabled the UK to deliver an underlying operating profit of £11.3m (2009 £12.4m).

“This decline in underlying operating profits was wholly weighted to the first half, with second half underlying operating profits being around £1.0m ahead of the prior year.

“As a consequence of the revenue mix change away from rental revenues, margins declined to 10.1% from 11.7% in the previous year.”

The group confirmed an investment programme for 2011 of £15m.

It said: “This level of investment for the year, together with planned future expenditure, will provide a well-invested and maintained fleet, which is capable of continuing to gain market share.”

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