TOOL HIRE TOP TEN 2014
INDUSTRY REVENUE TOPS £2BILLION
Catherine Stratton presents her 13th annual review of the UK’s Top Ten tool and equipment hirers.
2013 was a good year for many leading tool and equipment hirers. As ever, they have been faced with a highly competitive market, but it was a market in which most of them were able to find some growth, despite the still sluggish economic background.
The make-up of the 2014 Tool Hire Top Ten is the same as last year. There have been no changes of ownership amongst the Top Ten this year and there has been little change in their ‘pecking’ order, although the rise of TP Hire from No.5 to No.3 is noteworthy. There are, however, indications that the rationalisation and re-configuration of depot networks by the market leaders could be causing them to lose market share, principally to local indepenent competitors.
As economic recovery strengthens, some resurgence in acquisition activity might be anticipated. Last year we saw both HSS and A-Plant acquiring companies that add to their activity and product ranges, but are not directly related to their core hire operations.
There is a considerable variation in ownership across the Tool Hire Top Ten and this has a significant impact on their individual strategies: 1. Speedy is the only publicly quoted hirer that is almost entirely focused on tool and equipment hire. It had become market leader before it acquired Hewden Hire Centres in 2007. The timing, of course, proved less than ideal and led to Speedy entering the 2008 recession with too much debt and too many depots. It has since seen a gradual erosion of its UK market share, but it still remains market leader by a good margin.
2. TP Hire, Jewson Hire and Hirebase are all divisions of builders’ merchants. The revenue figures included for TP Hire and Hirebase have been provided by them because, as divisions of the merchant’s business, they do not produce publicly available accounts. Jewson does not provide us with any figures for its hire operation, so we continue to make our own estimate. It should be borne in mind that these operations are an integral part of their groups’ businesses, sharing premises and, to a large extent, customer bases. They also tend to have a narrower product range and consumable sales probably account for a larger part of their revenues than is the norm. What is obvious is that tool and equipment hire is seen as an expanding area for builders’ merchants and a relatively easy area to penetrate through their existing customer bases.
3. HSS and Brandon are both owned by private equity companies. Each has a history of several owners and their current ownership is,
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by its very nature, likely to be limited in duration. Exponent, HSS’ private equity backers since October 2012, is showing strong support for the No.2 player’s expansion.
4. Hire Station and A-Plant are both subsidiaries of publicly quoted companies. A-Plant is part of Ashtead Group and the UK subsidiary has been eclipsed by Sunbelt in the US for some years. Nevertheless, the past year has seen a revival in acquisition activity at A-Plant and it seems likely to build further on this. Ashtead Group, as a whole, is one of the largest hirers in the world and, with a market capitalisation of £4billion, has recently become only the second equipment hirer to be part of the FTSE 100 Share Index (the other is Aggreko, currently capitalised at £4.6 billion).
By contrast Hire Station is owned by Vp, where the founding Pilkington family retains a stake of over 50% of the shares, with the company valued at £231m. Both Vp, as a whole, and Hire Station have made good progress over the past year.
5. The smallest of the Tool Hire Top Ten are both privately-owned companies, GAP and Supply UK. GAP has developed as a combined tool and plant company and it is the largest family-owned hirer in the UK. It has come through the recession exceptionally well and has clearly got the confidence of its bankers, which enabled it to secure a three year asset-based revolving credit facility of up to £70m. Growth prospects at GAP look excellent for 2014.
Supply UK is by far the smallest of the Top Ten companies. Nevertheless, its management has been innovative in carving out niche markets and it is gaining market share.
THE SIZE OF THE MARKET
There are very wide variations in the estimates of the size of the UK tool and equipment hire market. The foremost difficulty lies in its definition. We have based our estimates on the broad base of equipment held by a typical hire outlet, so we endeavour to eliminate the revenues of larger equipment held by companies such as Speedy.
We continue to use the total revenues generated by the Top Ten as the basis on which we estimate the overall size of the market. Because of the problems of quite widely differing accounting periods, we estimate Current Revenues for the Top Ten. These are based, where available, on interim figures released by the quoted companies, or on other information such as general growth figures.
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