A declining oil price has had ‘no impact’ on the Middle East operations of equipment rental firm Lavendon (LVD), according to chief executive Don Kenny.
He says performance in the unit, which accounted for 40% of underlying operating profit in the year to end-December 2014, is being underpinned by trillions of dollars of planned infrastructure spending in coming years.
Operating profit in the region grew to £14.4 million, or 2.8%, despite a £1.3 million exceptional charge as operations in India were shut down.
Kenny claims at-risk oil-related revenues across its operations in Kuwait, Saudi Arabia, Oman and the UAE are only a few percent of sales.
‘Oil and gas related services in the Middle East account for around 4% of our turnover,’ explains Kenny.
‘One-third of that is in Kuwait, where spending is unlikely to be cut because of the commitment to bring up oil refining quality.’
Lavendon’s full-year results also show the group exceeded an underlying 11% return on capital employed (ROCE) target set out when Kenny took charge three years ago.
Exceptional items include a non-cash £8.9 million goodwill charge in Belgium, where performance was poorer than expected and some equipment had to be redeployed. Performance elsewhere in Europe was solid.
Pre-exceptional earnings per share increased 9% to 15.7p and Lavendon stock trades 5.7% higher at 177.5p.
