Speedy targets costs after profit warning
CONSTRUCTION equipment and tool rental group Speedy Hire has warned full year profits will be “materially below” expectations after its poor start to the year.
Shares tumbled 16% to 31p on the news. Speedy has lost more than half of its market value this year.
The Newton-le-Willows-based company’s said it had begun a programme to cut costs by £13m this year, of which some £6m “relates to people costs” , though an exact number of jobs being cut was not disclosed.
Executive chairman Jan Åstrand said: “Following the extremely disappointing start to the year, we have taken action to grow revenue and cut costs. Whilst these actions will take time to come to fruition, we believe they will deliver material benefits over the medium term.”
Mr Åstrand became executive chairman in July when chief executive Mark Rogerson left suddenly after the company’s wretched start to the year.
In an update ahead of half-year figures due to be reported on November 10, Speedy said a number of “remedial actions” to tackle certain legacy issues are being implemented.
They include: a programme to increase engineering resources, redistribute assets throughout the depot network to improve asset availability, and optimise stock levels; a realignment of the sales function to better address the needs of the SME market; a more effective operational structure and overhead base which more closely aligns costs with revenues and improvements to the IT system to enhance management information and the customer experience.
Speedy said: “Whilst we have now instituted the remedial actions referred to above, the resolution of the legacy issues previously identified is taking longer than originally anticipated.
“Current year core hire revenue in the UK and Ireland is now expected to be c.10% below the prior year. Accordingly the board anticipates that profitability will be weighted towards the second half of the year and materially below current market expectations.”
Net debt at 30 September 2015 is expected to be at a similar level to September 2014 (£104.4m), it added.
