HSS Hire surges as it announces additional cost savings

Shares in HSS Hire surged on Thursday after the tool and equipment hire firm said it has identified £10m to £14m of additional savings to be made following a strategic review.

The company said the extra savings - on top of the £13m announced in the third quarter - will enable it to substantially reduce leverage and create a more resilient platform from which to drive profitable growth.

The review also identified significant potential for improved profits in the heritage tool hire business by focusing on profit opportunities in relation to customers, products and branches. HSS said that while the group will focus on the tool hire business, management will ensure its specialist Rental and Services businesses continue to perform well.

The company has also identified a number of actions to strengthen its commercial proposition. It said that targeted sales plans based on customer segmentation will provide focus on the most profitable opportunities and the prioritisation of local markets, with the group continuing to build on its digital competitive advantage.

HSS expects these priorities to deliver a “significantly” improved business performance and said that by 2020, it aims to achieve revenue growth in line with the market, rental growth ahead of the market, an EBITDA margin above 20% and EBITA margin above 9%. In addition, it’s aiming for leverage of less than 3x and return on assets above 20%.

Chief executive Steve Ashmore said: "HSS is a business with attractive qualities and significant potential. Our strategic review, the most detailed in the company's history, has provided us with deep insights on HSS's trading performance and enabled us to devise a clear and actionable set of priorities.

“We have made progress over the past six months to return the business to operating profitability, providing us with a platform from which to make further improvements. Our specialist tool hire and rental businesses are performing well and the additional cost savings we have identified will see a material reduction in leverage in 2018. As we look further ahead, we are excited by the group's potential and confident in our plans."

At 0950 GMT, the shares were up 13.3% to 33p.