Less room for manoeuvre
07 May 2008
Lavendon's chief executive Kevin Appleton says the current market turmoil - and the resulting big drop in Lavendon's share price - will "make the pursuance of a full-on acquisition strategy a bit more difficult. It reduces room for manoeuvre on the equity side.
"Alongside that, it is getting more difficult to get debt funding, although our experience is that we are not seeing that - we're still getting people willing to lend to us."
He says the current market conditions look like "business as usual", with few signs that demand for platforms is falling. The group has budgeted capital expenditure of around £60-65 million this year - an significant increase over 2007 - but Mr Appleton points out that it is not committed to spending all this money and could reduce it if markets became tougher.
This investment will fund around 350 additional units each at its German and Spanish fleets this year, as well as between 350 and 700 units at Rapid (formerly Rapid Access), its Middle East operation.
These Middle East machines will mainly be used fleet from Lavendon's European operations as well as pre-owned platforms from US rental companies. Dirk Naessens, DK Rentals former major owner and now a senior manager at Lavendon, recently visited the US in part to source these machines.
The Middle East is currently Lavendon's fastest growing market. There is a lot of activity in the United Arab Emirates - with Dubai in the middle of a construction boom - but Mr Appleton says Rapid's expansion will concentrate on Saudi Arabia, a market still in its infancy. He tells AI that the Middle East access rental sector is becoming more competitive; "There has been a bit of bandwagon jumping."