LIVERPOOL stockbroker Panmure Gordon put a ‘buy’ recommendation on the shares of Newton-le-Willows group Speedy Hire today, declaring it has “turned the corner”.
The note, from analysts Paul Jones and Mike Allen, was in response to an “encouraging update” from the plant hire group in its presentation to shareholders at today’s annual general meeting.
They noted the improving picture from trading as the firm moves into the second quarter and away from the “dampening effects of quarter one bank holidays”.
And they said improving yields in the first quarter provide optimism for the second half of its current financial year, “with increasing visibility and significant debt reduction”, adding “we believe Speedy has very much turned the corner”.
Speedy chairman Ishbel Macpherson will tell shareholders later today: “The new financial year has begun satisfactorily and overall performance remains in line with management expectations.”
She will reveal that areas like water, waste, energy and transport provide promising opportunities, despite the uncertainty in the wider construction sector.
Group like-for-like revenues for the first quarter to June 30 were 0.4% up on a like-for-like basis, excluding fleet equipment sales, and since April this year, monthly comparatives have improved, with June 2011 up 6.2% on the previous year.
She will add: “Encouraging progress continues to be made in both of the newer operating activities, the international asset services and training and advisory services divisions.
“Combined turnover in the first quarter was up 70.3% on the prior year, totalling over £3.5m , and the divisions are progressing towards profitability as planned.”
Since the end of the last financial year the accommodation hire division was sold for £34.9m to the Elliott Group, removing the only loss-making and non market-leading operation from the group.
This also enabled Speedy to cut net debt from £113.9m at March 31 this year to £79.9m, with further reductions expected during the course of the current financial year.
Ms Macpherson will conclude: “With trading improving in line with expectations and having secured new banking arrangements and disposed of the loss-making accommodation hire operation, the board considers that, with its market leading position, strong balance sheet and clear market approach, the group is well positioned to take full advantage of wider economic recovery.”