REVIVING FOR TUNES?
What is the real state of the UK hire market? 2009 was probably a year most hirers would rather forget. Now, however, many of the larger hirers report that they are busy again. How much of this increased activity is due to a backlog caused by the shutdown of so many sites over the winter is difficult to gauge. It is even harder to know whether this increased activity will be sustained.
The new Coalition Government has moved swiftly in its attempts to restore confidence in the money markets, against an increasingly difficult outlook within the euro zone, which will also affect us. Some stringent cuts in Government expenditure look inevitable and we must expect capital budgets to be affected, when the Budget is announced on 22 June. As we go to press, the Organisation for Economic Co-operation and Development is warning of the necessity for public spending cuts and tax rises in advanced economies by next year.
With economic conditions set to remain ‘challenging’, how are the major hirers currently responding to this challenge? In City News, commencing on page 11, we assess Speedy’s financial results for the year ended this March. The undisputed No.1 in the Tool Hire Top Ten has seen its revenues tumble by over 27%, but indicates that, over the last few months, turnover has been gradually edging up so that by this April, its revenues were broadly in line with those 12 months earlier.
LIKE-FOR-LIKE 11% RISE IN REVENUES
By contrast, HSS, No.2 in the Top Ten, has recently reported that in the first quarter of 2010 it achieved an 11% rise in revenues over the first three months of 2009, on a like-for-like basis. Chief Executive Chris Davies confirms that this is after a 12.6% decline in volumes last year - most of that fall came in the first half of 2009, with sales in the second half described as ‘flat’. Thus, HSS could well be out-performing its Top Ten peers.
There are a number of possible reasons for this: HSS is probably better positioned than some in the repair and maintenance market, which is more recession-proof than the general construction market. The company is a major hirer of heating equipment, so it will have reaped benefit from the harsh winter. Chris Davies believes that the HSS strategy of remaining focused on its customers and on its staff is paying dividends. He describes the company as “passionate about service” and one of its key roles as helping the customer reduce his costs.
Later in this issue, commencing on page 35, we examine how Brandon - No.3 in the Top Ten - has performed over the recession. Managing Director Tim Smith believes the company was better placed during the opening months of this year because its customer base is more focused towards smaller local and regional builders. While the large building sites were shut, many of the smaller companies remained busy as they were engaged in repairing damage caused by the severe weather.
Brandon is now seeing activity levels moving up slightly month on month. Tim Smith says there has been a return to a more normal seasonal pattern that prevailed in 2007 and earlier years, but vanished in 2008 and 2009. Its parent, Wolseley’s recent interim statement is much in line with this; it includes a quarterly like-for-like revenue growth analysis: in the UK this has improved from a 12% decline in the quarter ended 31 July 2009, through declines of 5% and 4% in the following two quarters to a return to growth of 4% in the three months ended this April.
Yes there are signs of a return to growth but, against the wider economic background, they are still very fragile. Much now rides on the Budget on 22 June: Will it nurture or destroy the recovery?
THIS ISSUE ALSO MAILED
TO FORMER READERS OF
With an extensive review of Bauma, this year’s major European plant show, held recently in Munich, this adventurous issue also features a preview of both Hillhead, billed as the world’s biggest working quarry show, and Vertikal Days, described as the UK’s only specialist lifting equipment event.
As a result, we are sending this issue to all former PHE readers. Who knows, when trading conditions allow, we may be able to publish PHE again in full. In the meantime, did anyone actually miss SED?
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