06.04.2016
Higher revenues higher losses for HSS
UK rental company HSS has reported higher revenues in its first year as a publicly quoted company, while at the same time losses have increased.
For the year to the end of December revenues were 10 percent higher than in 2014, at £312.3 million. While pre-tax losses increased from £8.5 million in 2014 to £13.8 million last year. Much of the loss was down to exceptional costs related to taking the business public and re-structuring its debt. Partially offset by substantially lower finance costs – down 35 percent or £11.4 million to £20.7 million.
Specialist revenues, which includes UK Platforms, jumped from £39 to £50.6 million, with operating profits rising to £11.5 million from £7.8 million in 2014. Capital expenditure in the overall rental fleet dropped to £65 million from £71.9 million in 2014, although total capital expenditure including delivery trucks and investment in buildings etc…was flat.
Chief executive John Gill said: “In 2015, we invested in the growth and development of our local branch network and our specialist businesses. Whilst our customers’ end markets were more variable than expected, we delivered revenue growth of 10 percent, ahead of the overall equipment rental market. Revenues in our Specialist businesses grew 30 percent year on year, materially ahead of the wider market. This partially reflects the acquisition of All Seasons Hire in May 2015 but is principally due to us starting to realise the benefits of our continued investment in the hire fleets, depot network and sales teams of ABird, Apex and UK Platforms through 2014 and 2015”.
Having examined our strategy in depth during the year, the board is confident that, with modifications to rebase our costs and ensure a deeper focus on operational productivity and capital efficiency, it continues to be the right one to create shareholder return over the medium term. These modifications will allow us to respond to market conditions with more flexibility while optimising investment and margins”.
“During 2015, we opened 50 new low cost local branches in new markets, extending our availability promise to our customers and winning share from both national and local competitors. These branches are part of our strategy to become ‘the local tool hire company with a national presence’ and are backed by continual development of our distribution system. This is continuing to evolve in 2016, with the opening in the first quarter of our new National Distribution and Engineering Centre, operated on our behalf by our long term partners, Unipart, alongside our existing network of Customer Distribution Centres across the UK. This latest evolution is designed to deliver clear competitive advantage through enhanced availability of equipment to branches and customer sites in support of our multichannel offer. It also drives utilisation and capital efficiency in our core business”.
“Following the challenges of 2015, we are taking a highly disciplined approach to managing our growth, with a focus on cost and operational efficiency, on improving productivity and on delivering higher standards of customer service. Our absolute priority is the creation of shareholder value and we have put in place the foundations for future profitable growth in 2016 and beyond”.
Vertikal Comment
On the surface these numbers do not look good at all, however they are clouded by a great deal of fog, due to the IPO acquisitions and other factors. If the company can hold firm to its longer term strategies it should see a much better year in 2016 and be well placed for a strong year in 2017, market willing of course.
There is much to be done and it could of course go either way, but we ought to have a better feel for it by the time the half year numbers are released.
Gasping for air
If the cap fits wear it, but it was not personal or aimed at anyone, just aimed at the industry as a whole.
Who isn't guilty of dropping rates but complains about others doing it?
Who criticises the large nationals but is wishing one of them will buy them?
Look at history, those who have been there and done it, are back there again.
Physician heal thyself.
Good response 'Crow Shelter'
I like it. A bit personal but nevertheless, clever.
I suppose it would make your point even stronger if we had just declared a loss which, incidentally, we have never done.
Gasping for air
Mathew 7:3
How can you say to your brother, 'Brother, let me take the speck out of your eye,' when you don't see the log in your own eye? First remove the log from your own eye, and then you'll see clearly enough to remove the speck from your brother's eye.
Let them be Barry.
While they all chase and sometimes feed off each other with their national and exclusive service agreements at hire rates that are beyond any sense of reason we quietly tootle along leaving them too it, picking up those better paying customers who want quality service. Busy fools and all that, eh?
Hopefully they'll never learn.
It will be interesting to see if the market leaders, HSS, Lavendon, et al can increase the hire rates and improve profitability as fuel and staff volumes and costs increase. Throughout the crane and forklift industries the market leaders, and the businesses with the best profit returns, continued to drive hire rates up. Quality and service at the right rates have their place in the market. The question for all of us is ; where do we see our own businesses.