150 job losses at listed tool rental business

Equipment rental specialist, VP, says it has made about 150 redundancies, despite its revenues now running at about 85% of pre-Covid levels.

In an update published today, the Harrogate-based business says it has continued to focus on rebuilding business activity, but has had to close or merge some of its branches in response to changes in demand.

It notes that while Group revenues have continued to improve, the initial impact from the re-opening of existing sites has slowed and the business has become more reliant on new projects starting.

In response to the downturn in trading, the Group initially mothballed about 120 locations, but says over 100 of those are once again fully operational.

Its update reports: “The re-alignment of capacity to better reflect current levels of demand has required us to merge or close 17 branches and regrettably make approximately 150 positions redundant across our various businesses, in the UK and internationally.

“The costs of these branch closures and the redundancies will be recognised as an exceptional charge in the current financial year ending 31 March 2021.

“The Group has continued to demonstrate excellent cash management and net debt has reduced further to £118.7m at 30 September 2020, which compares with £159.7m at 31 March 2020, an improvement of £41m.

“A sustained period of strong cost control, reduced capital expenditure and excellent working capital management has delivered this impressive net debt improvement.

“Markets are generally stable and infrastructure work, in particular, should be supportive as the likes of the AMP7, HS2 and Hinkley Point programmes start to gain momentum.

“We do however remain slightly cautious with regard to the short to medium term prospects as we await evidence of a recovery in confidence and the commencement of new projects.

“In addition we also remain conscious of the fact that the Covid pandemic is yet to be fully under control.

“The longer term outlook for the Group remains positive and we are proactively identifying organic growth opportunities, focused particularly within those of our businesses already achieving pre-Covid levels of trading.”

The announcement comes after Vp’s chief executive Neil Stothard said that: “Sadly 2020 is going to be a regrouping and rebuilding year”, during an interview with  TheBusinessDesk.com in June when the firm released its results for the period to 31 March.

Vp’s share price closed last night at 650p,  which is 35% below its February high of, but above its low of 510p seen at the start of lockdown.