Vp profits up 8% despite 'challenging' year

Plant rental firm Vp has boosted its pre-tax profit by 8% to £21.7m in 2008/09.

The increase was despite a much smaller rise in revenues of 1% to £150.9m for the year ended 31 March 2009.

The company contains six divisions: Groundforce, UK Forks, Airpac Bukom Oilfield Services, Torrent Trackside, TPA and Hire Station.

In his statement, chairman Jeremy Pilkington said that the fact the company operated in a number of different niche markets had helped to mitigate the impact of the downturn. But he warned that "most of our businesses experienced a more challenging second half than a year ago".

He said: “This has been another year of progress for the Group.  The economic conditions remain challenging and uncertain, however we believe that our financial strength, our diversity of end markets and our continued focus on service excellence, will enable Vp to deliver another satisfactory result in the new financial year.”

Groundforce:

Vp said that continued investment in the AMP4 programme underpinned the revenues of the excavation support systems division, compensating for a reduction in housebuilding activity.

Revenue climbed 8% to £37.8m, while operating profit before amortisation was up 26% to £11m.

Capital investment in the fleet was down at £6.8m and Vp warned that Groundforce's core markets would be "more challenging going forward".

UK Forks

Vp's telehandler hire arm UK Forks fared less well with a 62.5% fall in operating profit to £1.2m. Revenue was also down to £13.2m from £16.1m in the previous year. VP said that trading conditions were "extremely challenging" for the business which relies heavily on the housebuilding market. It also warned that it was "too early" to expect any recovery in 2009/10.

Airpac Bukom Oilfield Services:

The division, which supplies services and equipment to the international oil and gas exploration markets increase revenue by 12% to £14.7m. Operating profit was also up from £3.3m to £3.9m.

Torrent Trackside:

Revenue at Torrent Trackside stayed static at £14m, but operating profit rose slightly to £1.2m from £0.9m. Vp said the trading year had been "difficult" and blamed a slowdown in rail spending as Network Rail reached the end of Control Spend Period 3 and renegotiated the next five-year programme, CP4, with the rail regulator. The firm was optimistic about the future, however, as the first year of CP4 will see increased spending on projects and track enhancements, despite a drop in spending on track renewals.

TPA:

Portable roadway systems division TPA saw an increase in revenue from £14m to £15.6m. Operating profit also rose from £1.2m to £1.7m.

Hire Station:

The small tools and specialist equipment hirer managed to boost its operating profit to £6.4m from £5.9m the previous year, despite a fall a 2.5% fall in revenue to £55.7m. Capital investment in the rental fleet dropped 27% to £8.8m to reflect "hardening market conditions". The division also benefited from a good first half of the year. The second half was "much more difficult" with a reduction in revenue and an increasing number of bad debts from small to medium sized companies.