Speedy Hire cutting costs, furloughing half of workforce

The company said Covid-19 had an impact on trading towards the end of March, with some business areas operating at lower activity levels. While there has been some reduction in demand for certain products and services, many projects are continuing, "new opportunities are emerging and others accelerating as economic conditions permit", it said.

As a result, Speedy has retained a "substantial" proportion of its revenues entering its new financial year.

The company has temporarily closed a number of its smaller depots and furloughed around 50% of its staff under the government's Coronavirus Job Protection Scheme and in Ireland under the Irish government's Wage Subsidy Scheme.

Speedy said it can continue to maintain national coverage through its larger superstores. All depots are physically closed to customers, with trading now carried out only through digital platforms or over the phone.

The company has frozen recruitment and the annual salary review due on 1 April has been deferred. In addition, all board directors and the leadership team have agreed to take a 20% pay cut for three months from 1 April. All non-essential spend has been suspended and variable operating costs, including IT and vehicle costs, have been reduced.

Speedy Hire also said it "will consider whether it is prudent to recommend a final dividend on the announcement of its final results, when the potential scale of the impact of Covid-19 on the group will have become clearer".

The group also said it was suspending all guidance. It has £100m of headroom, between net debt of £80m and £180m facilities and its covenants are only tested if this headroom drops to £18m or less.

Chief executive Russell Down said: "We are proud to be supporting several Covid-19 related projects, including the establishment of the Nightingale hospitals, and have offered our four-hour delivery service free to all NHS providers.

"We have taken significant measures to protect our financial position whilst preserving our ability to continue trading and to respond quickly to changing market conditions. Over the medium term we remain well positioned to benefit as normal trading conditions resume."

House broker Liberum said: "We think the market underestimates Speedy’s strong financial position, as its shares have fallen 38% since 21 February.

"Even in spite of a weak short-term outlook, we expect net debt to fall in 2021 as capex is flexed. Speedy’s strong balance sheet will ensure it gets through the lockdown period and is then in a very strong position to deliver market share growth and take advantage of opportunities that may arise."