16.05.2012

Speedy bounces back to profit

The UK’s largest equipment rental company Speedy has published its full year results for 2011/12 showing a significant turnaround in terms of profitability.

Total revenues for the period were £329.3 million down seven percent on last year, however underlying revenues – without the accommodation business that has been sold and the Network Rail contract which the company lost last year – were £326 million 4.5 percent up on the year. The improvement is down to a 6.6 percent increase in rental rates and a substantial rise in the percentage of the fleet available for rent.

The company also managed to turn last year’s loss of £6.2 million into a pre-tax profit this year of £8.3 million. Although after exceptional items and write downs this is £3.2 million profit compared to a £27 million loss.

Capital expenditure on the rental fleet was £64.2 million – 54 percent higher than last year, helping lower the average age of the fleet from 57 months last year to just over 50 months as of the end of March. A further £10 million was invested in facilities and IT. Net debt was reduced from £113.9 million to £76.3 million during the year.

Chairman Ishbel Macpherson said: "We are pleased to report that the business has returned to profit in the year. Our strategy continues to be one of aligning ourselves to the key market sectors and the majors that are demonstrating growth, along with a disciplined approach to cash and managing costs. This has resulted in continued progress for the Group and we have created a solid platform from which to build for the future."

“The Group will maintain its focus on delivering a safe, efficient service at an acceptable level of return. We will continue to avoid the pursuit of unprofitable, low‐margin work, which does not recognise our contribution and risks, and attempts to commoditise our service offering. To assist this we introduced a performance scorecard, which is issued to every depot, every week ‐ measuring each operation’s performance against a number of metrics including fleet availability, on‐time deliveries and collections and invoice accuracy.”

“It is encouraging to see that as well as our own internal rating assessment being at record levels of satisfaction, an independent assessment survey scored Speedy’s Net Promoter Score at 29.5 percent, compared to our peer group rating of 11 percent. To enforce awareness and customer service standards, any depot failing to achieve a 90 percent plus satisfaction level fails to qualify for performance bonus, irrespective of its profitability status.”

Vertikal Comment

This is strong comeback from Speedy which seemed to be in danger of losing its way at one point as one of its main competitors - HSS - appeared to be flying high. However as these numbers show the company is firmly back on track and perhaps beginning to benefit from the significant restructuring and changes that have been implemented during the recession.

Speedy says that it has divided its businesses into four main categories - lifting, power, survey and general tools - all sectors in which it is market leader. It is also reorganising its 283 depot network into major regional distribution points, superstores and around 200 local express outlets, which will be convenient to city centre sites etc.

The company appears to be back in good shape and ready for a new growth phase, both in the UK and the Middle East although there is a great deal of work to carry out to put its new network strategy into place, which needs to happen without too much disruption.

With Speedy and HSS following relatively similar UK distribution strategies, both of which appear to be paying off, it will be interesting to see how A-Plant and Hewden react in the year ahead.