16.11.2016

Speedy bounces back

UK rental company Speedy has reported a strong return to profitability in its first half both in the UK and overseas.

Total revenues for the six months were £187.1 million up 13.5 percent on this time last year, although much of this relates to the sale of its heavy equipment rental business, without that revenues improved five percent. In the UK and Ireland, revenues were 12.6 percent higher at £174.4 million again much due to the sale of the heavy equipment business. Revenues from the rump of its overseas business jumped over 25 percent to £12.3 million, although a good deal of this was currency related.

In terms of profit, last years pre-tax loss of £13.5 million was converted to a profit this year of £5.4 million, with both the UK/Ireland and the overseas operations contributing. Capital expenditure was almost half the levels of last year, at £23.4 million, most it spent on the fleet, while the company also sold off equipment from the fleet to the tune of £19.7 million, cutting its rental fleet by around 10 percent. Net Debt was cut by an impressive 17 percent to £85.4 million.

Chief executive Russell Down said: "These encouraging interim results confirm that our recovery is well established. We are now focussed on the strategic development of the business over the medium-term and are implementing a range of customer service initiatives to ensure that Speedy is competitively positioned to grow profitable market share. Reflecting the progress the group has made, we now expect results for the full year to be ahead of the board's previous expectations."

Vertikal Comment

These numbers are encouraging although it is too early yet to declare a solid turnaround, the underlying business recovery does not compare to some of the growth numbers seen by other UK rental companies such as Ashtead or Lavendon. However it is good to see positive numbers coming from what was until recently the UK’s largest equipment rental company.

While there may be many reasons for reserving judgement on this positive turnaround, it does look like the company is heading in the right direction and building an excellent base from which to consolidate and then expand. Shareholders will be sighing a breath of relief today.