AT THE HEART OF HIRE
HIRE SWIMS AGAINST THE ECONOMIC TIDE
Whilst the last quarter of 2011 saw the UK economy contracting by 0.2%, compared with the same quarter of 2010, economists are, generally, of the opinion that recent data on manufacturing and retail sales indicates that the economy is growing.
Maintaining our last issue’s Forum plea that we should ‘Control the Controllables’, whether or not there is a contraction in the economy does not appear to be causing too much concern for our hire market. The latest Statements from leading hirers, as confirmed in City News on page 13, are, on the whole, reassuring with both Speedy (with growth up 7.6% in the October-December 2011 quarter) and Vp indicating good progress. In addition, powered access hire market leader, Lavendon, recently issued its annual results for 2011, which also show significant improvement.
HSS has also been quick to release its 2011 figures. These show an 8% increase in revenues to £180m, although EBITDA grew more slowly at 2% to £39.8m. In spite of the lower pre-tax profit figure, this is still a positive performance and shows another leading hirer boxing above its weight.
HSS showed strong growth in the early months of 2011, although this eased by its final quarter, which saw a 1% fall in revenues compared with 2010. However, at least part of the fall is attributable to the contrasting weather conditions in the two quarters; with its extensive fleet of heating equipment, HSS prospered during the severe weather at the end of 2010.
Profits growth at HSS was constrained by the costs of its major investment in its new operating platform for logistics and maintenance. HSS’ commitment to investing to improve service and efficiency is to be welcomed. However, by contrast, one worrying aspect of The Office for National Statistics’ analysis of
the final quarter GDP figures was the 5.6% drop in business investment - in money terms a fall of £1.7 billion. Such a decline cannot make for comfortable reading for the Chancellor as the Budget draws near.
Two of the major considerations for companies planning to invest are, of course, confidence in the economy and the availability of finance. According to recent figures from the British Bankers’ Association, lending to UK private, non-financial companies fell by £2.8 billion this January, after a fall of £2.2 billion in the previous month. These are severe falls and compare with an average monthly decline of £0.5 billion over the six month period from June to November.
How much of this decline is due to the reluctance of companies to borrow and how much to the reluctance of banks to lend is difficult to evaluate. The Governor of the Bank of England recently indicated to MPs that the levers for growth were in place - with the exception of credit availability to small companies. The Government’s plan for £20 billion of cheaper loans, backed by the state, appears to be struggling to meet both the requirements of the banks and the businesses themselves. One must continue to question (as with so many other things) why the banks, who nearly brought this country to its knees, and who survived only through the largesse of the UK taxpayer, are still able to dictate terms?
The Chancellor has to find ways to restore confidence both to business and to individuals if the UK economy is to be set on a firm recovery path. The task seems formidable and, even if we escape recession, growth is likely to continue to be constrained. Nevertheless, our hire market continues to show its ability to swim against the economic tide.
3
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52