Trading Statement

RNS Number : 3194F

Speedy Hire PLC

08 October 2008

 



October 8, 2008

Speedy Hire Plc

('Speedy Hire' or 'the Company' or 'the Group')

Trading Update

Speedy Hire Plc, the UK's largest provider of tools and equipment for hire, is issuing this trading update following completion of the half year ended September 30, 2008. The Group will announce its interim results on November 26, 2008.

The diverging outlook for different end-markets highlighted at the time of the AGM statement in July has continued. Whilst Government and regulated industry projects continue to provide good levels of business, uncertainty in the credit markets is impacting on overall activity and reducing confidence within the general construction market. This increasing uncertainty means that, whilst current trading is satisfactory, the forward outlook has become unusually difficult to forecast.

Spending on infrastructure related projects remains strong in both the public and regulated sectors. Government spending on schools, health, prisons and defence, together with increased activity from the regulated sector in utilities, renewable energy, rail and airports, has seen revenues from Speedy Hire's top 50 construction and industrial clients increase by 43% in the five months to August. These customers account for approximately 28% of Group revenue. 

However, reduced activity in other areas, such as residential, commercial, retail and mixed-use development, has become more pronounced in recent months. This, together with the completion of existing projects, has seen the overall construction market continue to contract, resulting in a significant decline in revenues from the smaller and mid-tier customer base. Financial constraints and economic uncertainty have also led to some new projects being delayed or deferred, with the result that the traditional seasonal uplift in demand patterns in late August and into September has been more subdued than in previous years. 

Against this background, revenue for the first half is expected to be up approximately 22% on the comparative period last year, assisted by the £115m Hewden Tools acquisition which completed on August 1, 2007. Within the Group's two principal divisions, Tool Hire and Equipment Hire, first half revenue is expected to be up approximately 21% and 25% respectively. The Group also anticipates that first half profit before tax (before amortisation costs) will be broadly in line with the prior year period.

With increased uncertainty surrounding the economic outlook, the Group has put in place specific cost reduction and cash management initiatives in order better to position itself in the more uncertain trading conditions. The flexibility of the Group's business model has enabled it to reduce costs with minimum disruption to its operating capability. Specific actions have included reducing the number of employees by approximately 4% by the end of September. Capital expenditure has also been reduced and gross spend for the current financial year is now forecast at approximately £75m, as compared with the £100-110m guidance provided at the time of the preliminary results announcement in May. 

These measures have ensured that the Group remains financially strong. Net debt at the end of September 2008 was approximately £280m, well within its £325m of committed bank facilities. This represents a c.£14m improvement on the position at the end of June 2008, notwithstanding the payment during the second quarter of the final dividend of £6.8m and £3.7m for the final tranche of the CAS acquisition. The Group continues to target a reduction in net debt from the opening position of £255.6m by the end of the financial year.

Looking forward, whilst the Group continues to draw confidence from the strength of the order books of its key national contracting customers which has converted into increased spending with the Group, it recognises that, without an improvement in the financial and economic climate, there will continue to be ongoing pressure on both its clients and their clients. It is this uncertainty that restricts the Group's ability to predict the future outlook with the same confidence as previously. Nevertheless, at this stage, despite a more challenging trading environment, the Group considers that it can utilise its operational and financial flexibility to remain in line with its expectations for the full year, subject to no further deterioration in the outlook for its end markets.

Enquiries:

Speedy Hire Plc	Hudson Sandler
Steve Corcoran, Chief Executive Justin Read, Group Finance Director Tel: [phone]	Nick Lyon/Wendy Baker/Kate Hough Tel: [phone]

Website:  www.speedyhire.plc.uk

Notes to editors:

Speedy Hire Plc

Speedy Hire Plc is a leading provider of equipment and support services to construction, manufacturing, industrial, rail and related industries.

The Group operates a number of equipment rental businesses specialising in tools and general building and materials handling equipment, portable accommodation, lifting equipment, surveying and measurement instruments, compressed air and power generating equipment and high performance pumps. In addition, the Group provides a range of support services including customer training on safety and awareness. 

Speedy Hire has a turnover of approximately £500m a year, employs over 5,000 people and operates from a network of 500 depots across the UK and the Republic of Ireland. 

 

END

 

 

TSTFKOKBABDDOKK