HSS Hire swings to profit in H1, sees FY earnings ahead of views

Shares of HSS Hire surged on Thursday after the tool and equipment hire company said it swung to a profit in the first half and that earnings for the full year are set to be ahead of market expectations.

HSS also said it has agreed to sell All Seasons Hire Limited, its heating, ventilation and air-conditioning hire solution provider, to Cross Rental Services for £55m in cash. Proceeds from the disposal will be used to accelerate the repayment of debt.

In the 27 weeks to 3 July, the group swung to a pre-tax profit of £11.2m from a loss of £12.9m in the same period a year ago, with revenue up 22% to £150.5m. HSS highlighted a strong trading performance and said its new operating model had driven "significantly improved" profitability above 2019 levels.

Chief executive Steve Ashmore said: "We started the year with strong momentum and trading continued to improve over the period, with Q2 21 revenues at 102% of 2019 levels, EBITDA and EBITA margins up and return on capital employed at a record level.

"This strong performance, combined with the post balance sheet date sale of All Seasons Hire, has allowed us to reduce leverage to around 1.0x, well below our 2.0x target, completing the final element of the strategic plan set out in 2017: to delever the group, transform the tool hire business and strengthen our commercial proposition."

HSS now expects full-year earnings before interest, tax, depreciation and amortisation, on a non-IFRS16, continuing operations basis, to be ahead of market expectations, while earnings before interest, tax and amortisation are set to be "materially" ahead.

At 0822 BST, the shares were up 15% at 20.13p.