Vibroplant wields the axe - ConstructionServices division trimmed as plant theft contributes to big losses

Vibroplant took the axe to its Construction Services division as result of its "underperformance" last year. The plant hire group spent œ875,000 in trimming the division's base cost.

Annual results from Vibroplant (12 months to March), published last week, show a loss before tax of œ2.9 million following the previous year's œ900,000 loss on continuing operations.

Turnover was little changed at œ37 million (œ36 million on continuing operations).

Vibroplant is now entirely UK-based following the disposal of the US business in February 1996.

Construction Services represents 60 per cent of Vibroplant's turnover and capital employed. Announcing the latest results, chairman Jeremy Pilkington said the division made a loss because of price deterioration and under-utilisation of capacity.

"Bad debt within this division was significantly worse than the prior year," said Pilkington, "with notable insolvencies in the cable contracting sector.

"The losses were a result of the ease with which plant is stolen from customers' sites following the announcement of insolvency," he said.

"The opening months of the new financial year have seen some improvement in sentiment in the plant hire industry and associated markets, and we have experienced a modest but perceptible improvement in price and utilisation," said Pilkington.

He added: "The cost reduction programme that follows our restructuring and the contribution from our newly acquired businesses should enable the group to improve its trading performance substantially in the current year".

Many of Vibroplant's traditional construction plant products do not earn sufficient levels of return to support reinvestment in new plant, he said.

"There have recently been two encouraging developments in the general construction sector," said Pilkington.

"The improved activity levels in the private housing sector will soon, we anticipate, be augmented by the release of local authority receipts to fund the Government's œ5 billion social housing initiative. We also welcome the re-launch of the Private Finance Initiative," he said.

During the second half of the year, Vibroplant acquired Cannon Tool Hire, with six depots in the Medway area of Kent, and Instant Hire with three depots in the north west.

Last month, Hire & Sales, with depots in Canterbury and Sittingbourne, was bought and merged into Cannon Tool Hire.