Specialist equipment rental firm VP (LON:VP.) confirmed FY27 earnings would meet its previous guidance after a positive H1 performance. The Harrogate-based group also predicted its H2 performance would exceed that of H2 2026.
Positive H1 performance
VP provides specialist equipment, personnel and services to the infrastructure, construction, housing and energy markets in the UK and abroad. Within the UK infrastructure sector, the firm noted demand from the electricity transmission market had remained strong in H1.
It also reported ‘encouraging momentum’ in the water market with AMP8 (asset management plan 8) activity increasing in Q2. Meanwhile, rail activity remained stable and the international segment continued to perform well.
Despite ‘challenges’ in the general construction market, the Brandon Hire Station business improved after last year’s restructuring. The firm expects to take some one-off costs for the overhaul in its current-year results.
CEO Alice Woodwark said H1 had ‘again demonstrated the strength and resilience of our diverse business model. Momentum in our UK segment increases our H2 confidence, where we remain well-positioned to take advantage of supportive infrastructure markets, specifically in water and electricity transmission.’
To our minds, VP is another beneficiary of the need to upgrade critical UK infrastructure to face the climate change challenge. Building resilience into the nation’s water, electricity, rail and energy systems is no longer up for debate, the work has to be done.
It’s encouraging to hear the firm talk of improvement in the water business as AMP8 activity increases. We’re also pleased to hear the rail business is chugging along.
Analysts James Tetley and Rachel Hayes at Equity Development note management have been buying shares in the run-up to today’s announcement, marking a sign of confidence. Yet the current valuation of 8.6 times FY27 earnings is undemanding, they say, and doesn’t reflect the group’s quality.
They also flag the fact VP has a history of more than 30 years of unbroken dividend payments. If it were an investment trust, that would make it a ‘Dividend Hero’.
