Speedy Hire swings to loss but investors cheer signs of turnaround

Shares in Speedy Hire rose sharply after the company’s first half results met expectations, with investors encouraged by early signs of progress in the turnaround and confirmation of full year targets.

For the six months to the end of September, the tools, equipment and plant hire services company swung to a pre-tax loss of £13.5m compared with a £5.3m profit in the same period a year ago.

Group revenue dropped to £165m from £189.3m and exceptional costs to reorganise the business totalled £14.2m before tax.

After sales began to tank in the early summer, the company initiated an urgent review that revealed a lack of focus on small business customers and misfiring business improvement programmes, including the implementation of a new IT and management information system. The UK & Ireland headcount has been reduced by 298 to 3,167, with significant savings coming from the senior and middle management levels.

As a result, chairman Jan Åstrand took an executive role and FD Russell Down took over from ousted CEO Mark Rogerson, together implementing a number of new measures, including the realignment of the sales function to focus on both strategic and SME clients, plus a programme to increase engineering resources, redistribute assets throughout the depot network to improve asset availability, and optimise asset levels.

"Following a disappointing and challenging start to the year, reflected in the results we are announcing today, we are beginning to see the benefits of the remedial actions put in place to address the various legacy issues," Down said on Tuesday.

“These are early days in the group's recovery and the full benefits will only be realised over the medium term. However, remedial actions implemented to date have started to stabilise our revenue base and we are expecting to see an improvement in the second half.”

Analysts at Investec recognised the early progress in the turnaround and noted the comments of expected improvements in H2, the strong balance sheet and good cash performance.

At 1155 GMT, Speedy shares were up 8% at 31.31p.