Growth in the oil and gas sector combined with increased rail network repairs has allowed specialist equipment rental firm VP to weather the construction downturn and report full-year results which beat analysts' expectations. This prompted analysts at broker N+1 Brewin to upgrade current year adjusted pre-tax profit estimates by 7 per cent to £16.8m, giving EPS of 31.8p, noting the benefits of "VP's strategy of focusing on specialist markets where it can command strong market positions".
For instance, operating profits in VP's Airpac Bukom division rose a third to £3.6m, underpinned by strong demand for air compression kit to the oil and gas exploration sector. The completion of the Pluto project in western Australia means revenues are likely to be flat and divisional profit could dip slightly in the current year. However, the diverse business mix offers plenty of growth drivers elsewhere such as Torrent Trackside, which is benefiting from a buoyant rail market. Profits here rose 38 per cent to £2.2m after completing the first full year of the Network Rail contract. The same contract helped revenues in VP's Hire Station unit hit a record £60m.
Investment in the fleet, up a third to £32.1m, was funded entirely by cash flow leaving net debt unchanged at £40.4m.
VP (VP.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 254p | MARKET VALUE: | £102m | |
| TOUCH: | 248-260p | 12-MONTH HIGH: | 269p | LOW: 191p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 227p* | NET DEBT: | 44% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 149 | 19.9 | 36.1 | 10.5 |
| 2009 | 157 | 20.8 | 36.4 | 10.8 |
| 2010 | 134 | 14.3 | 24.7 | 10.8 |
| 2011 | 141 | 12.2 | 23.4 | 10.8 |
| 2012 | 164 | 15.3 | 29.6 | 11.4 |
| % change | +16 | +26 | +26 | +5 |
Ex-div: 11 Jul Payment: 10 Aug *Includes intangible assets of £39m, or 97p a share | ||||
