Posted on October - 07 - 2010
Speedy Hire trading profitably and in line with forecasts
Speedy Hire 300
SPEEDY Hire, the Newton-le-Willows plant hire group, is now trading profitably, but still expects to report a first half loss next month.
In a trading update today the business said its strategy of aligning itself closer to major clients, particularly on overseas contracts, has resulted in a three-year supply agreement with Costain Group on Das Island, Abu Dhabi’s major offshore oil and gas complex.
First half turnover from two divisions created specifically to develop such links is expected to exceed £4.5m, compared with £800,000 last year.
The group added that it expects a “substantial increase” in revenues from these two divisions in the second half of the year.
However, it warned that although they are expected to achieve profit during the full year, first half operating losses of £2m will be reported due to start-up investment.
Speedy also expects a £3.4m hit on its links with Connaught, which is now in administration. That includes £1.7m owed on tool and equipment hire and a further estimated £1.7m on the loss of future revenues.
In recent weeks Speedy has won several new deals, including a five-year sole supplier agreement with Thames Water and a three-year contract with Babcock International linked to its marine, nuclear, networks and infrastructure divisions.
Total second quarter revenues are expected to be £5m higher than the first, but overall first half turnover will be about 4% less than the previous year due to the timing of equipment sales between this year and last.
Debt has risen from £119.3m in March to £125m by September 30, but Speedy said it is trading in line with expectations.
It warns these forecasts depend on the business maintaining momentum during the traditionally stronger second half of the year.
But it says with its strong balance sheet, market leading position and closer alignment to growth markets, it is well placed to benefit from any market recovery.
Liverpool stockbroker Panmure Gordon agreed with the group’s outlook, adding: “Overseas progress looks encouraging.”
Analysts Paul Jones and Mike Allen say the latest update does not indicate a “quick fix” for the firm, but they believe it is now “coming out of the fog” and they remain buyers of its stock.
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