Lavendon's (LVD) half-year results were about self-help rather than economic recovery, of which there was little sign in Europe. The company, which hires out crane-like machines for aerial construction and maintenance work, grew underlying pre-tax profit by 17 per cent to £11.1m, but that mainly reflected a reduced interest-bill as expensive fixed-rate debt has gradually expired. Operating profit rose just 2 per cent.
Chief executive Don Kenny says he's "disappointed with the performance in the UK" - the company’s historic centre of gravity. He stresses that the current recovery in construction evident in official GDP figures is driven by housebuilding, which is too small-scale to require Lavendon's kit. "We need big atriums and warehouses; buildings 30-40 metres high." He also makes no apology for blaming poor weather in the first four months. UK rental revenues fell 6 per cent to £49.1m, reducing underlying profits from £7.2m to £6.1m.
Meanwhile, the Middle East business continues to grow, reflecting a frenetic drive across the Arabian Peninsula to build infrastructure such as airports and, railways. It generated £6.5m of operating profit - more than the UK for the first time - on revenues of just £21.8m. Such eye-catching margins may be explained by very high market share, including some 60 per cent in Saudi Arabia. Management spent £27.4m on new cranes to meet demand growth, increasing net debt to £108m.
Broker Peel Hunt expects adjusted full-year pre-tax profit of £29.8m, giving EPS of 13.8p (from £27.6m/12.8p in 2012).
LAVENDON (LVD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 172p | MARKET VALUE: | £289m | |
| TOUCH: | 172-172.3p | 12-MONTH HIGH: | 187p | 120p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 123p* | NET DEBT: | 52% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 115 | 4.97 | 2.44 | 0.75 |
| 2013 | 114 | 8.58 | 4.07 | 1.15 |
| % change | -1 | +73 | +67 | +53 |
Ex-div: 4 Sep Payment: 18 Oct *Included intangible assets of £88.4m, or 53p a share | ||||
