000744 - City News 23/1/09 18:08 Page 1
CITY
NEWS
SPEEDY SHARES PLUMMET
Catherine Stratton assesses Speedy’s recent trading statement.
The Stock Market reacted swiftly to a Speedy trading statement and £38m (compared with £48m
issued on 20 January, sending the shares to a new low of 46p, a fall last year). This is after “the
of 51% on the previous day’s closing price of 94.25p, and valuing substantial contribution of the cost
the UK’s largest hire business at less than £50m. reduction initiatives”, which
Speedy has been implementing
The Speedy statement makes it clear that its trading environment over recent months. It is estimated
has deteriorated significantly since its interim results. At that time it that the full implementation of
announced a 22% growth in revenues in the half year to 30 these programmes will save £42m in costs next year.
September, but indicated that October’s revenues had fallen 6%
below expectation. Speedy is now seeing a further erosion of its The deterioration in trading and Speedy’s high level of gearing
market as private development continues its precipitous decline. (112% at 30 September) are the major factors in the City’s treatment
The company describes infrastructure spending as “buoyant”, of the shares. The company’s statement affirms that it has “a
but “ongoing uncertainty in the credit markets continues to impact supportive and continuing close working relationship with its
overall activity and further reduce confidence in the general banking syndicate and a process has commenced to establish
construction market.” Speedy now expects its revenues in the final appropriate covenants for the remainder of Speedy Hire’s £325m
quarter of its financial year (i.e. January to March 2009) to be five year facility which expires in June 2012.”
“significantly below’ those of the same period last year, and full year
revenues to be ‘broadly in line with the prior year” (£465.5m). CEO Steve Corcoran remains confident, emphasising Speedy’s very
strong market position with “the biggest network” and the “widest
As a result, the Speedy Board now expects profits before taxation, range of tools and equipment” making the company “better placed
and before amortisation and exceptional costs, to be between £33m than its competitors to see this recession through.”
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