Powered access specialist Lavendon (LVD) is losing UK customers to newly-listed rival HSS Hire (HSS) but still posted impressive results today, as earnings per share in the first half of 2015 gained 18%.
Don Kenny, chief executive at Lavendon, said there was pressure on its tier three business in the UK - smaller businesses and trades people - and that some market share had been lost.
Struggling rival HSS said earlier this week it had grown revenue by as much as 15% in its powered access division - well ahead of the market - indicating it could be picking up some of Lavendon's lost business.
Revenue in Lavendon's UK business was down marginally.
But larger accounts at Lavendon are holding up well, Kenny added, saying the business was focusing on profitability in a tough UK market and that results were in line with expectations.
'In the UK there have been a few problems in terms of tier three customers which are local customers,' says Kenny.
'In tier one and tier two we did very well. There is more competition in that tier three market and we lost some market share in the year.
'The primary focus for us is not just top-line growth but bottom line profit growth, and we have delivered on that front.'
Shares in Lavendon are the biggest gainers on the FTSE All-Share today, up 7.3% to 178p.
Both Speedy Hire (SDY), the UK's largest tool hire business, and HSS have posted profit warnings in recent months and have seen their share prices plunge.
Self-help measures in recent years, including investment in systems and smarter distribution, helped Lavendon deliver an 18% increase in earnings per share to 6.6p, despite flat revenues.
Now top-line growth – which grew just 1% in the period – is being targeted by pulling forward £20 million of new equipment spend planned for 2016 into the current financial year. Return on investment from new plant is starting to look more attractive, says Kenny.
‘The stand-out feature for us in these results is the improvement in return on capital employed, which now stands at 12.7%,’ says Kenny.
‘The holy grail a few years ago when I joined the company was to get that number above 11% and now we are well past that.’
Underlying profit-before tax was £14.5 million, an increase of 17.9% on the prior period. Net debt declined slightly to £96 million.