Lavendon Share Discussion Threads

[che7win] 14/7/2016 07:35

I reckon LVD remains 50% undervalued at these levels.
Meanwhile I pick up a nice dividend as I wait for a rerate.
Escape, buying here and elsewhere, but trading OSB, Barc and others recently.

[beangrinder] 14/7/2016 07:26

I think this update is very reassuring. Hard to believe market will leave the company on a PE of 6 given the expected growth. Foreign earnings are a real plus in post Brexit landscape too. DY is over 5% and covered 3 times. share price will probably fall though if past year is any guide!

[qs99] 14/7/2016 07:13

very interesting....as long as market believe debt will fall H2 as it says and benefits of sterling depreciation, then IMO this appears to be UV!

[mikepompeyfan] 14/7/2016 07:01

RNS Number : 1290E
Lavendon Group PLC
14 July 2016

14 July 2016

Lavendon Group plc

First Half Trading Update 2016

Encouraging First Half Performance - Strong Revenue Growth In Key Markets

Lavendon Group plc ("Lavendon" or the "Group"), the market leader in the rental of powered access equipment in Europe and the Middle East, today issues the following Trading Update for the six months to 30 June 2016:

Summary

· Board remains confident of delivering its expectations for the full year
· Group total revenue for the first half increased by 11%, with rental revenues up 9%
· UK rental revenues increased by 7%
· Middle East rental revenues increased by 22%
· Continental Europe rental revenues increased by 3%
· Short-term impact on margins from investment expected to unwind over second half
· German restructuring continues on track to be fully operational during Q4

The Group's total revenue for the six months ended 30 June 2016, on a constant currency basis and excluding ex-fleet equipment sales, increased by 11% compared with the prior year, with rental revenues increasing by 9%. Based on actual exchange rates, the Group's total revenue (excluding ex-fleet equipment sales) increased by 15% with rental revenues increasing by 13% over the first half.

In the UK (44% of total Group rental revenues), market share gains drove strong volume growth that generated a 7% year on year increase in rental revenues in the first half (8% in Q2). This increased rate of revenue growth reflects the benefits of the additional strategic investment made in 2015 to improve the scale and mix of the fleet, together with better fleet availability through the increased efficiency of our transport and maintenance operations. During Q2, we also increased the level of investment in the UK above that originally planned for 2016 by an additional £7 million, adding capacity on selected high demand units. While the cost of these investment decisions has tempered margin progression in the first half, we expect these costs to be fully absorbed over the balance of the year and for the UK business to deliver another year of margin improvement.

Our Middle East business (29% of total Group rental revenues) has continued to deliver significant revenue growth, with increased utilisation of an enlarged fleet delivering 22% year on year growth in rental revenue across the first half (23% in Q2). Revenue growth from our operations in the UAE, Kuwait, Oman and Qatar has continued to more than absorb a decline in our higher margin Saudi Arabian business. As previously reported, we have moderated our planned investment in 2016 for the region, compared to recent years, and this is being directed towards those markets demonstrating strong growth. Given this more modest investment spend and a broadly stable working capital profile, we expect to increase the level of free cash generated from the region during the year.

Rental revenues in Continental Europe (27% of total Group rental revenues) increased by 3% year on year in the first half (3% in Q2), with continued volume growth driving revenues higher in France (+10%) and Belgium (+2%) which more than offset a weaker performance in Germany (-2%). The previously announced programme to restructure our German business continues to progress as planned and is on track to be fully operational during the fourth quarter of this year

In summary, the Group has delivered strong rental revenue growth in the first half reflecting the benefits of the investment in additional fleet and operational processes to improve fleet availability. While the cost of these investments has constrained our operating margins in the first half, our overall profitability has continued to improve and we expect these investment costs to be fully absorbed over the second half of the year. The Group's ROCE remains firmly above its weighted average cost of capital notwithstanding the increase in the Group's capital employed as we expanded the fleet and our self-funded fleet replacement programme continues.

During the first half, exceptional costs of c.£2.5m have been incurred relating to the restructuring programme in Germany and the re-integration of the previously out-sourced UK transportation function.

As expected the Group's net debt level at 30 June 2016 increased to £138 million, on a constant currency basis, relative to £119 million at the 31 December 2015. At actual exchange rates, the Group's reported net debt position at 30 June 2016 was £150 million reflecting Sterling's relative weakness against the Euro and US dollar at the half year following the UK's vote to leave the European Union (EU). With the Group's strong operational cash flows and planned investment programme for 2016, the Group continues to operate comfortably within our previously stated target leverage range of up to 1.75 times EBITDA.

While it is too early to fully assess the wider economic implications of the UK's decision to leave the EU, we recognise the increased uncertainty in the macroeconomic outlook. We do however believe the Group remains well positioned, with over 50% of its revenues, profits and cash flows being derived from outside the UK. Should there be a pro-longed period of Sterling weakness, the Group's reported results would benefit from the translational impact on its overseas earnings which offers some mitigation should there be any adverse economic consequences on the Group arising from the UK's decision.


Don Kenny, Chief Executive of Lavendon, commented:

"The Group's trading performance in the first half has seen the delivery of strong revenue growth building on the momentum established towards the end of 2015. This growth reflects the benefits of our strategic investment programme in 2015 to strengthen our market positions in all regions, and the continued operational improvements made during the first half to support the delivery of our growth plans.

Given the encouraging trading performance in the first half, together with the degree of resilience provided by our international operations, the Board remains confident of making further progress during the year and delivering on its expectations for 2016."

[zho] 13/7/2016 09:54

From SDY thread:

"We are expecting news from both Lavendon (half year trading update – 14th July) and Speedy (AGM statement – 13th July) next week. Having highlighted our concerns on 27th June regarding the outcome of the EU Referendum, we are cautious ahead of next week’s announcements. We expect both Speedy and Lavendon to signal that it is too early to predict the full repercussions of Brexit, in line with recent statements from many construction and housebuilding companies. Despite this, recent data suggests that the construction market is already beginning to feel the impact of Brexit uncertainty, with the Markit UK Construction PMI registering its weakest reading for seven years in June (46.0 vs. 50.7(F) and 51.2 last)."

Singer Broker note just out:

[meijiman] 13/7/2016 09:18

Think Lavendon management needs to get a grip. If the story is still good they need to communicate that and give the broker a good kicking for not doing a proper job.

[gargoyle2] 13/7/2016 07:41

Pretty positive statement from SDY this morning.

[beangrinder] 12/7/2016 21:29

It's been disappointing here for months now. Based on historic figures and the last update it looks very cheap. A trading update is due on Thursday. If it's basically in line etc then the price is so low, but I thought that when it was 150-160p! This week will confirm situation hopefully but the market is pricing in bad news it seems. More patience I guess...

[puzzler2] 12/7/2016 20:48

Every time I buy this share it disappoints - but at 108p, this must surely be a buy? - anyone agree? - or might I be disappointed yet again?

[escapetohome] 12/7/2016 19:29

You buyin chezza?

Che7win 8 Jun'16 - 14:37 - 1802 of 1833 0 0

Heading back to 140s

[gleach23] 12/7/2016 11:06

makes you wonder how much bad news can be priced in!

after all the positive updates, it'll be ironic if the statement isn't good but we get a bounce

[my retirement fund] 12/7/2016 10:48

Mr market does not expect a pretty picture

[extrader] 11/7/2016 14:23

Hi mrf,

As per the previous post, Mr Market seems to be awaiting the 14th July update and outlook statement.

HTH

[my retirement fund] 11/7/2016 13:30

why is the share price still falling ?

[gleach23] 07/7/2016 09:30

That would be a pity as they had been adding between last Nov and this Feb...per my post 1616 I had Fidelity and Old Mutual down as potentially responsible though of course it was only speculating...

Ho hum

[spud] 07/7/2016 08:47

Looks as if BlackRock are the responsible body for the overhang...spud

[rmillaree] 01/7/2016 17:53

Gleach
I tried later and got a much better spread, inside the midprice, perhaps i wasn't looking at my screen correctly this morning.

[gleach23] 01/7/2016 15:31

Half Year trading update due within next 2 weeks, if previous years are anything to go by (11th, 10th and 16th in last 3 years).

Makes recent share price action all the more interesting.

Intending to buy some before update but holding back in case there's a dart down to £1

[gleach23] 01/7/2016 12:35

The online spread for a modest amount of shares is around 108.9 - 111.9 which is a bit wide for LVD but you can ignore the market quote of 108-115.

rmillaree - your broker is having a laugh. I can even get a quote for 20k shares @ 113.3 - a little disappointing as it indicates lots of shares still available. I did buy a few yesterday however.

[rmillaree] 01/7/2016 11:05

Pretty nasty spread to buy online - my broker is asking for 115p :(

[spud] 01/7/2016 08:51

Looking at the trades (size & volume) over the past 3 months, it seems apparent that there is still a fairly significant overhang in evidence. Until a large buyer is prepared to clear this, the price will remain under pressure imo.spud

[rhomboid] 30/6/2016 22:15

What I find bizarre is than someone somewhere thinks that selling at this level is a good call, looking at the numbers a PE of 6 and a yield of 5% & a chunk of non GBP profits makes this a very attractive stock.

[adamb1978] 30/6/2016 21:14

To a certain extent, I think you need to ignore market prices at the moment. Maybe go on hols and come back in a month. Until we know who the Tory leader will be, what sort of agreement they'll seek with the EU and therefore whether the UK will have access to the single market, its harder to price equities with certianty. That said, you can 'take a view', hope you're right and invest on that basis

I think May will be PM and we'll have a Norway type agreement by xmas