Rental slump takes its toll
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I The slump in the truck ren1 market has taken its toll on awsongroup, whose pre-tax -ofits have fallen from .£3 milin to £1.52 million in the first x months of the year. Despite an increase in turiver of 26% to £4.2 million, e Milton Keynes-based trail. rental and contract hire impany was badly affected by !xtremely difficult" conditions
in the first quarter and high interest rates which had a "significant effect on short-term profitability".
Chairman and chief executive John Dawson says that strenuous efforts in the second quarter had improved utilisation and rates, "though they are still considerably lower than the levels of the first half of 1988.
"There are still significant pressures on margins in this sector, not helped by inflationary cost increases and the high level of interest rates."
He says the hardest hit sectors of the short-term rental market, "which is an early barometer for the UK economy" were at the lighter end of the market — up to 16tonne box vans, white goods and parcels carriers. "Consequently we have disposed of 8% of our fleet in that sector."
Dawson says the group has not taken any panic measures: during a difficult period he states it has been able to expand turnover by 39%.
''Sustained high levels of interest rates are having a significant effect on short-term profitability but the underlying strength of the group's business is unaltered," he says.