28.09.2015

Speedy cuts expectations

UK rental company Speedy has issued a trading update today warning that revenues will be down 10 percent this year and profitability will be "materially below current market expectations".

The statement continued: “Following the disappointing start to the current financial year, the board and management team have implemented a number of remedial actions to address the legacy issues identified. These actions 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
- Improvements to the IT system to enhance management information and the customer experience.

The benefits from these actions will be realised from the second half of the year onwards. Overhead are expected to be around £13 million lower than the prior year. Approximately £10 million of this saving will be realised in the UK and Ireland business, of which around £6 million relates to people costs”.

“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 around 10 percent 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”.

The Middle East business. Which the company failed to sell earlier this year is breaking even at an operating profit level, and the company says that further opportunities for revenue and margin growth. Net debt at the end of this month is expected to be at a similar level to September 2014 when it was £104.4 million.

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."