Shrinking losses for tool hire giant

HSS Hire Group, the national tool and equipment hire company which has the majority of its workforce based at Trafford Park in Manchester, has shrunk its half year losses by 30% as it focuses on becoming a ‘one stop shop’ for key account customers.

Pre-tax losses reduced to £9.8m (2015: £146.4m loss) on a turnover which increased 13.5% to £166.2m for the half year to July 2, thanks to key accounts and services revenue through HSS OneCall and Training.

Adjusted EBITA was up 64.4%, which the company said  reflected the delivery of planned cost savings and and the positive impact of accretive services revenue growth.

HSS saw strong growth in key account revenue, whilst continuing the development of its specialist businesses, allowing for cross-selling.

It said the loss was mainly due to exceptional costs associated with strategy execution as its new National Distribution and Engineering Centre ramps up for nationwide coverage by the end of the financial year.

Last month the company put the finishing touches to its new 36,000 sq ft refurbishment centre in Trafford Park, which HSS said is driving capital efficiency.

The custom-built centre on Mosley Road will provide 18 additional job roles by the end of 2016, allowing HSS to increase refurbishment capacity by 50% compared to the company’s previous site on Westinghouse Road.

The centre is specially built to refurbish specific larger pieces of equipment in the group’s hire fleet such as scissor lifts, generators and lighting towers, and will drive equipment safety and sustainability through engineering excellence.

Chief executive John Gill said: “Customers are increasingly seeing HSS as a single source provider of tools, equipment and related services and our trading growth reflects this. Our focus on capital and operational efficiency shows through in our utilisation rates and our EBITA margin, both of which have continued to improve through Q2 16.

“We are confident our new National Distribution and Engineering Centre will position us well for scale and volume growth and, combined with our e-commerce platform and national branch footprint, will further enhance our customer proposition by transforming availability within our sector.

“The board believes we are well positioned to take advantage of, and continues to look for, opportunities to increase scale for the benefit of customers and shareholders.”

Looking ahead, HSS has seen a strong start to the third quarter and it said it will continue to focus on capital efficiency, with improvement in utilisation and increased refurbishment activity allowing capital spend in 2016 to be lowered to between £40m and £45m.

The results anouncement made no mention of the fact that Toscafund, its second largest shareholder, has been pushing for a merger with Merseyside-based Speedy Hire.

Speedy Hire has thus far refused to bow to sustained pressure from  Toscafund, which is its  largest shareholder, to merge with HSS.

“The independent board unanimously and strongly recommends that shareholders vote AGAINST the resolutions,” Speedy said in a stock market statement earlier this month.

It added: “…contrary to the view of Toscafund, it would not be in the best interests of all shareholders to seek a combination with HSS at this time.”

Speedy’s board revealed that Toscafund first asked it to consider a merger with HSS in January 2015, a month before HSS’s initial public offering, which was considered briefly before being rejected.

Toscafund’s chief executive Martin Hughes is also known as “the Rottweiler” because of his aggressive approach to investing.

The hedge fund manager has been growing increasingly frustrated at Speedy’s performance and management – the company’s share price has fallen by more than a third over the past year after a series of profit warnings.

In May Speedy Hire announced it was continuing to struggle with exceptional costs wiping out profits and plunging it into a £57.6m loss.