Tool hire firm to steady nerves with £10m of savings

HSS Hire Group, which has the majority of its workforce based at Trafford Park in Manchester, is targeting £10m of cost savings in 2016 as it bids to steady the nerves of shareholders.

Profits for the listed company  are continuing to suffer as a result of acquisitions and the opening of 50 new branches in the UK and Ireland.

In the year to December 26, revenue grew 10% to £312.3m (2014: £284.6m) adjusted operating profit almost halved to £15.4m (2014: £27.3m). Adjusted earnings per share fell to 3.2p (2014: 8.4p).

In addition to the 50 new outlets, the company has also begun the set up of its National Distribution and Engineering Centre.

All Seasons Hire, a heating ventilation and air conditioning rental business, has been acquired and integrated during the year and there was continued investment into previously acquired businesses.

HSS also achieved gross cost savings of £2.4m towards the end of 2015, as it targeted annualized cost savings of £10m in 2016.

Chief executive John Gill said: “In 2015, we invested in the growth and development of our local branch network and our specialist businesses.

“Whilst our customers’ end markets were more variable than expected, we delivered revenue growth of 10%.

“Profitability was lower than planned at the outset of the year. Following a slower than expected first half the board and I reviewed our strategic objectives and concluded that, with some modifications, they continue to be the right ones to generate shareholder return through market share growth and operational and capital efficiency.

“As previously announced we have taken actions to rebase our costs and to build more flexibility into our operating model and strategy to enable us to respond more rapidly to changeable market conditions.
 
“We expect to see the full year benefit of the cost reduction programme implemented in H2 2015 delivered through 2016.

“We also expect to reduce our capital expenditure, following two strong years of fleet investment and the opening of our new National Distribution and Engineering Centre in H1 2016. Together with the cost reduction programme, we expect these actions to improve our cash generation and financial performance.”