DEMAND for trucks and trailers has been severely hit during the

recession, with the market nationally down 30% in volume terms in both

1990 and 1991, but there are signs that the market may be on the point

of turning up.

Dawsongroup, the truck and trailor contract hire and rental company,

believes it will be among the major beneficiaries given the company's

healthy state both financially and in terms of its rental fleet which

has been steadily updated and is expected to number 880 by the year end

after further capital investment. A further two business sites are to be

opened taking the total to around 30.

Despite the fact that the company began to feel the effects of

recession as long ago as the end of 1988 it has prospered. Results for

the six months to end June showed an impressive 80% jump in profit

before tax to #3.55m. Earnings per share advanced by 71% to 7.7p and the

interim dividend was doubled to 1.5p.

Chairman and chief executive Peter Dawson, who owns a 75% stake in the

company, said the result were ''very pleasing'' and reflected the

company's commitment to quality and a clearly focused strategy aimed at

serving niche markets.

On a divisional basis, the rental business benefited from good demand

with turnover up 5% despite an 8% smaller fleet compared with the

corresponding period last year. Average time rates and utilisation rates

both improved on last year. Within contract hire, the customer base has

broadened in recent years to cover a variety of sectors.

Customers include Bernard Matthews, London Rubber and the Royal Navy.

Turnover within this part of the business was maintained and margins

were slightly better.

The commercial vehicle market has been the worst hit by the recession

but it is showing small signs of recovery, albeit from a very low base,

which is expected to continue.

The costs associated with making new vehicles comply with new

regulations governing noise and smoke emission will inevitably be passed

onto the consumer. However at the current time prices and margins are

still subject to downward pressure with what buyers there are seeking to

drive a hard bargain. The dearth of new vehicles in recent years has led

to a weak aftermarket. Dawsongroup is the UK's largest Volvo truck

distributor.

Problems facing rival Tiphook concerning its accounting practices have

turned the spotlight onto the sector. But Dawsongroup's finance director

Clive Gear, was keen to stress that the company's balance sheet was

''clean and tidy'' with no off-balance sheet borrowings or operating

leases.

The balance sheet remains strong with gearing almost unchanged at

119%, which is low by the industry's standards. A strong positive

cashflow enabled the company to repay early, loans on its freehold

properties. Capital expenditure was #13.5m in the first half and is

expected to reach #30m by the year-end.

Dawsongroup has no wish to become a large player in terms of fleet

size just for the sake of it but is more interested in growing a small

and profitable business.

Given the problems facing Tiphook and the skeletons thought to exist

elsewhere in the industry it is probably no bad thing. In a tight market

Dawsongroup's shares jumped 60p to 303p.