Speedy Hire sees H1 revenues up 6.5%

Revenues for the half year to 30 September, excluding disposals, are expected to be up around 6.5% on the same period a year ago, with services revenue growth of 8%. UK and Ireland core hire like-for-like revenues are broadly flat, with strong growth in the higher margin SME market which has offset lost revenue following the liquidation of Carillion.

Meanwhile, utilisation rates for UK and Ireland are up around 56%, up from 54.7%, while the international business is performing strongly.

Speedy Hire said there will be no exceptional costs in this half year versus £4.7m in 2017, while net debt is expected to come in at £65m compared to £69.4m at the end of March. Return on capital employed will be in excess of 12% versus 9.4% in September last year.

Finally, the company said adjusted pre-tax profit the full year is expected to be ahead of the prior year and in line with the board's previous expectations.

Liberum said the 6.5% revenue growth is in line with its forecasts and consistent with the 6.6% reported in 1Q19.

"Despite the headwinds created by the liquidation of one of its largest clients, Speedy has delivered impressive revenue growth in 1H19. This has been helped by a particularly strong performance in its SME business. The successful execution of this part of the strategy, combined with continued focus on asset optimisation, leaves the company in a strong position to deliver continued improved return on capital employed and cash returns. With 18% total shareholder return potential to our unchanged target price of 74p we reiterate our buy rating."

At 0950 BST, the shares were up 2.1% to 64.72p.