Speedy Hire profits rise as SME customers grow
Tools, equipment and plant hire services company Speedy Hire posted a surge in first-half profit on Wednesday amid strong growth in its SME customer numbers and revenues.
In the six months to 30 September, pre-tax profit was up 120% to £13.2m on revenue of £192.8m, up 6.5% from the year before. Adjusted pre-tax profit was 24.1% higher at £13.4m and the company lifted its interim dividend by 20% to 0.6p a share.
Meanwhile, net debt reduced to £62.7m from £63.1m in the same period a year ago and return on capital employed pushed up to 12.3% from 9.4%.
On a like-for-like basis, UK and Ireland hire revenue increased 0.5%, reflecting strong growth in SME revenues, offset by the effect of the Carillion liquidation. Meanwhile, services revenue grew 8.7% thanks to growth in rehire in the Middle East and increased consumable and fuel sales.
Speedy Hire said asset utilisation in the UK and Ireland improved to 56.2% from 54.7% last year, while average age of hire fleet reduced to 3.6 years from 4.2 following further investment.
The group also said it has strengthened its customer delivery promise in London, with delivery now available within four hours on most popular products.
Chief executive Russell Down said: "These results demonstrate the progress we have made in implementing a customer focused strategy and growing our SME customer base. We have further improved our customer service proposition and the use of technology to better manage the business and meet market challenges.
"We remain confident of delivering a result for the full year in line with our expectations."
Liberum said the results provide evidence that the group continues to deliver on its strategic aims. The brokerage said pre-tax profit of £13.2m was 6% ahead of forecasts, while net debt was also better than expected.
"Improving asset utilisation and significant share gains with SME clients suggest an encouraging outlook," it said.
"With the balance sheet providing an additional source of optionality in the medium term, we believe that the shares are materially undervalued and reiterate our buy and 74p target price."
At 1040 GMT, the shares were up 0.4% to 58.44p.