Core markets help deliver strong recovery at equipment rental business

Harrogate-headquartered equipment rental specialist, VP group, has enjoyed significant growth in its operating profits, driven by the strength of infrastructure, construction and housebuilding.

The listed business has issued its audited final results for the year ended 31 March 2022, which include a 67% rise in pre-tax profits to £38.9m (2021: £23.3m) and a 14% rise in revenues to £350.9m (2021: £308m).

EBITDA before exceptional items was up 22% to £88.9m (2021: £72.7m).

As previously reported VP has launched a formal sale process, with the firm today stating that more details will be given to shareholders when appropriate. The company adds it is “business as usual”, with the group focused on delivering its plans for the current financial year.

Jeremy Pilkington, chairman, said: These results represent significant progress across the Group, as the business continues its recovery following Covid related impacts and we have seen substantial progress across all key financial metrics.

Jeremy Pilkington

We are particularly pleased with the increased investment into the rental fleet which was driven by increased demand and an emphasis on lower emission products.

“The strong return on average capital employed performance demonstrates the resilience of the Group’s quality of earnings.

Although there are some macro related headwinds from cost inflation and supply chain disruptions, we see significant upside growth opportunities for this year and further ahead.”

Among the highlights for the period were two substantial contract wins. In March 2022, Valero Refinery renewed its long running support contract.

Also in March, a new fiveyear exclusive hire partnership was agreed with Watkin Jones, which included the acquisition of Watkin Jones’ inhouse plant and tools fleet.

And there has been good progression in digital innovation across the entire VP operation.

VP highlights continued development and implementation of ESG initiatives across all its divisions.

It says all parts of the business continue to introduce new greener equipment solutions to their customer base. And the group has been supporting UK regional restoration and conservation projects during the year, with further projects in the pipeline.

VP notes it has made an encouraging start to the new financial year, with its management taking a proactive approach to mitigate cost inflation and supply chain delays.

It says growth across the group’s three key sectors is providing a supportive market backdrop for the new financial year.

Neil Stothard, chief executive, added: The quality of the recovery in our trading performance is extremely pleasing and these results demonstrate a significant increase in profitability and a material recovery in the quality of those profits.

“These strong results have been largely supported by the core markets which we serve.

I am optimistic of Vp’s future prospects and believe our core markets will continue to offer good opportunities for further increases in demand for our products and services in the new financial year.”

Stothard stressed the company’s return on average capital employed was now back to pre-Covid levels, adding that VP is successfully coping with current inflationary pressures.

Like many other businesses, he said the group is having to contend with a tight labour market and a struggling supply chain, though it has not been directly affected by the war in Ukraine.

But he pointed to key opportunities for VP over the next few months, such as the next investment cycle for the UK water industry (AMP7) growing rail industry investment – including the Trans Pennine upgrade – and, for VP’s international division, the re-opening of borders in Australia, New Zealand and Malaysia.