Lavendon to close Spanish rental operation

Lavendon Group is to close its Spanish rental operation in the second half of this year because of the poor long-term outlook for the market.

The Spanish operation has depots in Barcelona, Madrid and Girona and a fleet of around 1000 machines, and employs 70 people. Its revenues in 2010 were £7.9 million, representing 4% of total sales and making it Lavendon's smallest business.

The closure will entail costs of approximately £5.0 million in the second half of the year - although net cash costs will be just £1.25 million after the sale of excess fleet from Spain.

In the announcement, which was contained in Lavendon's interim management statement for the first six months of the year, the company said; "Due to the weak long-term outlook for our market in Spain, we have concluded that the capital currently invested in our Spanish operation will achieve better returns if substantially re-deployed to our other markets."

The company meanwhile said the search for its new chief executive officer, following the departure of Kevin Appleton, was continuing. John Standen is interim executive chairman, with Jan Astrand, Mike Potts and Andy Wright as chief executives of Continental Europe, the UK and International Operations, respectively.

Overall, Lavendon said the company had performed ahead of expectations for the first six months of the year, with revenues up 8% on the same period in 2010. Revenues in all its European businesses increased in the second quarter, although at a slower rate than the first quarter.

"The first half has seen a solid improvement in both revenues and margins", said the Lavendon statement, "Whilst mindful of the continuing economic uncertainties, we believe that if the current momentum in our underlying trading is maintained, coupled with the anticipated improvement in our operational efficiency, the results for the year will exceed the Board's previous expectations."

Lavendon announces its results for the six months to 30 June on 26 August.