HSS Hire backs guidance, sees cost savings at top end of range

HSS Hire backed its full-year guidance on Wednesday as it said it has successfully agreed the extension of its revolving credit facility and that cost savings should come in at the top end of the guidance range.

In an update ahead of its full-year results in April, the tool and equipment hire company said that trading since its last update at the end of November has been "positive", with the group maintaining solid momentum. As a result, it reaffirmed that its full-year performance is in line with the guidance given in August, of second-half adjusted earnings before interest and amortisation of between £8m and £11m.

HSS also said it has agreed with its lenders to extend its £80m revolving credit facility, which will now mature in July 2019.

The strategic review announced by the company back in December outlined initiatives to cut costs by between £10 and £14m a year, £7m to £10m of which related to changes in the supply chain model. HSS said it has reached an agreement with Unipart, which operates its national distribution and engineering centre, to make changes to its supply chain that will enable the realisation of cost benefits at the higher end of the range.

Chief executive officer Steve Ashmore said: "We continue to make good progress in implementing our strategy and today's announcement is a significant milestone in delivering further cost savings in our supply chain.

"With clear implementation plans and highly engaged teams, who have responded positively to the proposed changes, we are confident in achieving savings towards the top end of our targeted range. This operational progress, combined with the extension of our bank facilities and positive Q4 performance, creates a strong platform to build upon in 2018 and beyond."

HSS also said in the announcement that the testing and repair of all fast-moving products will be completed closer to its customers in the first half of this year, which will mean "far better" levels of utilisation and efficiency for the group and improved availability for customers as more products will be available for hire in branches.

As part of the changes, HSS will recognise a provision for exceptional costs of around £40m, including an impairment of related assets of £7m. This is expected to give rise to a net cash outflow of £2m to £3m in 2018 and net cash inflows of £7m to £8m a year over the next seven years.

At 0920 GMT, the shares were up 3.1% to 25p.