HSS Hire sees costs savings at upper end of target

Tool and equipment rental company HSS Hire said on Tuesday that it expects to deliver cost savings at the upper end of its target range, while capex is expected to be lower than previously guided.

In a pre-close trading update for the 13 weeks to 1 July, the company said good progress has been made with the cost reduction initiatives announced in May and as a result, it expects annualised savings of between £11m to £13m below the first-quarter cost run-rate.

The group said its new operating model is delivering improved fleet availability across its network, driving greater capital efficiency and meaning it now expects FY17 capex in the range of £36m to £38m, down £4m to £6m from 2016.

Meanwhile, underlying revenue in the second quarter was marginally ahead of the previous year with an improving rental revenue trend as the programme of sales initiatives it started to implement in March gained traction with target customers.

Chairman Alan Peterson said: "Our clear focus during Q2 has been on translating our market-leading fleet availability into sales growth within our rental business. We are therefore pleased to see underlying core hire sales momentum building month by month across the quarter as initiatives targeting smaller and medium sized customers have begun to have an impact.

"In parallel, the operating model is also delivering the planned benefits of greater capital efficiency, which is reducing our investment requirement, and higher cost savings through operational efficiency. We are encouraged by these initial signs that our operating model is delivering the benefits we expected."

At 1040 BST, the shares were flat at 61p.