Slow turnaround for HSS Hire as new CEO announced

HSS Hire Group, the tool hire company with the majority of its workforce based at Manchester’s Trafford Park, has  narrowed its first quart losses as it continues a cost savings drive.

The company saw first quarter turnover dip 4.9% to £80.2m for the 13 weeks to April 1, but said this reflected one week’s less trading in the period and the closure of 55 branches through the fourth quarter of 2016 and the first quarter of 2017.

Adjusted EBITDA had improved on last year to -£4.5m (2016: -£7.4m).

HSS said that sales initiatives, which had started in March, were delivering positive year-on-year rental and related revenue growth, with underlying revenue in the first seven weeks of the second quarter marginally ahead of the prior year.

It also said that a new operating model was delivering higher fulfilment rates and resulting in improved fleet availability.

Meanwhile, ongoing cost saving initiatives are expected to deliver annualised cost savings of £11m to £13m through the rest of the financial year.

Alan Peterson, chairman of HSS Hire said: “We are now firmly focused on re-establishing revenue growth by leveraging our new operating model to deliver market-leading availability to our customers in our branch and Customer Distribution Centre network.

“During March we implemented new sales initiatives, focused on core markets, to reinvigorate revenue growth in our core Rental business, particularly among our smaller and medium-sized customers. Whilst we are still in the initial phases, we have seen some encouraging signs in the markets in the early weeks of the second quarter.

“We remain focused on driving efficiency across our network and increasing cash generation through the business. This is reflected in the cost initiatives announced today.”

HSS Hire also announced the appointment of Steve Ashmore as the group’s chief executive from June 1.

Ashmore, who has previously held senior roles at supply chain company Exel and heating firm Wolseley, will replace John Gill.

Peterson said: “Steve brings considerable leadership experience in a range of industries complementary to HSS including building products supply, logistics and distribution, which will be invaluable as we target the continued profitable growth of the group.”

Commenting on today’s announcement from the company, Paul Stanley, regional managing partner at Begbies Traynor’s Manchester office, said: ““Since its IPO in 2015, HSS Hire’s fortunes have gone from bad to worse, announcing a string of profit warnings, widening losses and most recently, the departure of its long running CEO John Gill in April. Clearly investors in the construction equipment and tool hire business have been voting with their feet, with the group’s share price halving over the past 12 months alone.

“With group revenues down 4.9% and only a modest reduction in net debt, incoming CEO Steve Ashmore still has a difficult task on his hands to turn the business around, given the historic issues he has inherited.”