12.10.2009

Speedy stable

Speedy Hire, the UK’s largest rental company has issued its interim trading statement for the six months to the end of September, which says that market is continuing to stabilise, but warns that there is little evidence yet of the seasonal pick-up often associated with late September/October.

It says that second quarter revenues will be broadly in line with the first quarter, with year on year revenues down 29 percent on last years £256.2 million, although that was 22 percent above the same period in 2007.

Speedy says that it continues to increase its penetration of the major contractor market, having recently won contracts with Bovis Lend Lease on the Stratford City project and MACE for London’s Shard of Glass building. Major contractors now represents around 26 percent of the company’s business compared to 21.5 percent a year ago.

Speedy also says that it had identified a further £30 million of cost savings which bring its total cuts since mid 2008 to £70million. The latest savings are expected to offset most of the loss the company recorded in the first quarter.

The result of the cuts is a reduction in headcount of 270 (six percent of its workforce) and 19 depots, which have been merged with other locations. Exceptional costs associated with these cost reductions will be around £8 million.

Net debt has almost been cut in half to £135 million and will be down to £120 million by year end.

At the same time the company is rolling out a number of new 'strategic initiatives' including its first move overseas with a joint venture in the Middle East with Al Futtaim Carillion ('AFC'), Carillion.

Speedy says that its aim is "to establish an industry-leading 'Full Outsource' model which will involve Speedy providing, complementary services in areas such as asset management, site support services and logistics control, in addition to its regualr rental offering.

Staff and equipment have already been shipped to the region with plans to spend a further £3.5 million in additional equipment over the next six months,

Patrick Rawnsley, formerly Speedy's company secretary, is to head up the new Branded & Advisory Services division to provide consultancy and training services to its customers in the UK construction market,

Outlook

Speedy expects full year profits to be in line with expectations thanks to the cuts it has implemented. It does warn though, that if there is a further downturn, it does not plan to make any further cuts in its operations and therefore profitability will suffer.

However it adds that the step-up of activity from its on-site facility at London's Olympic Park and the recently awarded new contracts at Stratford City, the water sector and other UK infrastructure projects are expected to help it through "what is still an extremely challenging trading environment."