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CITY NEWS


MIXED MESSAGES


Catherine Stratton assesses Speedy’s latest trading update issued ahead of its half year results, and considers HSS’ third quarter results.


Speedy’s recent trading update, issued ahead of the half year results due for publication on 17 November, indicates that the company continues to modify its operations to meet the requirements of the current market and its immediate prospects. It is probably fair to say that most followers of the fortunes of Speedy and the hire market were taken by surprise at the news that Claudio Veritiero, MD, UK & Ireland Asset Services, was to leave his post at the end of October, as part of a ‘streamlining’ of the Group’s senior management structure. He was also a member of the board of Speedy Hire plc and is surely the highest ranking casualty, so far, of the recession and its aftermath amongst directors of UK quoted hire companies.


Speedy’s actual trading in the second quarter of its financial year (i.e. July to September) showed an improving trend with revenues estimated to be £5m ahead of the first quarter and, excluding fleet sales, 12% up on the second quarter of 2009. When fleet sales are included, however, the first half turnover in 2010 is likely to be 4% less than the £184.8m recorded in the first six months of 2009.


First half profits will be adversely affected by exceptional charges relating to the management changes, and to the consequences of Connaught plc entering administration. Speedy was an exclusive supplier to Connaught and is taking a charge of £1.7m to cover the losses likely to result. Speedy is hopeful it will secure contracts with those companies that have taken over Connaught’s business.


Speedy has continued to make progress with securing long term supply contracts; its recent achievements include a five year agreement with Thames Water and a three year contract with Babcock. Chief Executive Steve Corcoran remains firmly of the belief that the major construction companies will continue to be the major beneficiaries of infrastructure investment and that Speedy is increasingly well placed to benefit. He also indicates that its recently established International and Branded & Advisory Divisions are key to the company’s renewed growth. In the Middle East, the International Division has signed a three year supply agreement with Costain to provide equipment services on Das Island. First half turnover from the new divisions is expected to be £4.5m, but the company is anticipating substantial growth in the second half.


STOP PRESS: In announcing its third quarter results for the period to 2 October 2010, HSS reported revenues for the first nine months of £126.6m, up 13% from £111.9m last year, and revenues for the third quarter of £44.6m, an increase of 14% from £39.3m last year. A strong performance has led to a 29.4% uplift in EBITDA to £29.8m in the first nine months. The company also announced capital expenditure of £12.3m for the first nine months, including £2m brought forward from 2011 to support customer growth. What does the differing performance of two of our leading national hirers tell us about our industry? We will give our usual thorough investigation of the state of the market and its prospects in our annual Tool Hire Top Ten article in our next issue.





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