LONDON (ShareCast) - Equipment rental firm Lavendon pulled out of its August tailspin after announcing a more than five-fold increase in pre-tax profit, as the benefits of its restructuring programme begin to feed through.
In the six month period ending 30 June, profit before tax soared from £0.7m in the same period the previous year to £4.6m this year, while revenue was up just 4% from £4.1m to £10.4m.
The improved performance was welcomed by executive chairman John Standen, who said: "The modest recovery in our markets combined with operational improvements have both contributed to increased operating margins and return on capital employed."
The company's German division, where revenue increased by 9% to £23m, is planning to reshape the business over the next 18 months, "so that it is more aligned with the market place and has greater capacity to deliver acceptable returs on the capital employed in the business."
Performance in the Middle East had been "disappointing" for the group, while results in all other locations were improving.
Current trading momentum has carried into the third quarter, the company said, adding that operational efficiency improvements are anticipated to accrue through the second half.
The group increased the interim dividend by 12% to 0.37p per share (2010: 0.33p).
The company anticipates that net investment for the year will total about £15m.
Singer Capital Markets, which rates the shares a "buy", said the figures were better than expected.
"H1 [first half] revenue has grown well and although headline growth slowed in Q2 [second quarter], there are factors that suggest that Q1 overstated underlying growth whilst Q2 understated it," said analyst Andy Murphy.
"However, given the more sensible pricing environment, especially in the UK, coupled with the restructuring, we remain confident that Lavendon can deliver on our forecasts," the broker added.
The share price was up 5.04% to 94.00p at 15:32.
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