Coronavirus puts brakes on at Speedy Hire

Speedy Hire has warned on profits, after the coronavirus outbreak saw activity levels decline.

The retailer, which rents tools and other equipment to the construction industry, said group revenues for the year to 31 March were expected to be around 3.5% higher year-on-year.

But it added that while underlying business momentum had been positive, “Covid-19 is now having an impact on our revenues with activity levels reducing”.

Adjusted full-year pre-tax profits are now expected to be “slightly below” the market consensus of £37m, and that looking further ahead, “the full impact of Covid-19 will depend on the length and severity of the disruption to activity in our markets.”

Speedy Hire said it had a committed asset-backed facility of £175m and an overdraft facility of £5m, available until October 2022. Net debt excluding lease liabilities at the year-end was in the range of £80m to £85m.

It said: “The group has significant headroom against its committed banking facilities and, in addition, has an uncommitted accordion facility of £220m. Net debt to EBITDA at 31 March 2020 is expected to be around 1.0 times, below the board’s target range.”

Russell Down, chief executive, said: “We have a well-invested fleet, diversified customer base and robust balance sheet.

“We are operating in an uncertain macro environment, and our number one priority is the welfare of our colleagues, customers and communities. Management has robust contingency plans in place, which are being continually update as the situation evolves.”

Liberum cut its target price on Speedy Hire to 72p from 86p, noting: “Looking around at other countries, it is by no means clear whether construction sites will all close or remain open.”

But it argued that Speedy Hire was well positioned financially: “It has £180m of committed facilities and £220m of uncommitted facilities, and the ability to cut cost and flex capex further. These give it scope to weather much more significant revenue falls that we have modelled. The shares are attractively value, looking out to the other side, and we see over 50% upside to our target price of 72p.”

Shares in Speedy Hire were off 10% at 42.0p by 1330 GMT.