25.05.2021

Tough year for Speedy

UK rental business Speedy has reported its full year results to the end of March, which show an almost 11 percent dip in revenues to £363.6 million. Pre-tax profits plunged 41 percent to £12.3 million, while net debt was more than halved to £33.2 million.

Capital expenditure on the fleet was cut 35 percent to £36 million, which increased the average age of the fleet from 39 to 42 months. Net debt was slashed 58 percent to £33.2 million.

Chief executive Russell Down said: “I am pleased to report results that are ahead of our expectations in what has been an exceptionally challenging year for customers and colleagues alike. These results are testament to the hard work of all our colleagues in supporting us throughout this period whilst maintaining excellent service levels to our customers.”

“The group continued to serve customers through the pandemic supporting the NHS and other essential services whilst prioritising the safety and wellbeing of all stakeholders. In April 2020 up to 50 percent of staff were placed on furlough leave and, whilst we maintained our national coverage, 66% of our depots were initially closed. Following a detailed operational review of trading during the first lockdown, 13 depots were permanently closed and a further 22 depots are being consolidated into six larger improved locations. No colleagues were on furlough beyond 30 September, although around 200 roles were regrettably made redundant during the year.”

“Our revenues declined initially, falling by 35 percent in April 2020, but recovered strongly following the first lockdown as existing customers returned to work and we secured work from new customers. In the fourth quarter UK and Ireland core hire revenue was four percent ahead of the prior year. In April and May 2021 core hire revenue was around two percent higher than the comparative period in 2019. The young age profile of the Group's hire fleet allowed us to significantly reduce capital expenditure in the first half year.”

"The group sold its Middle East equipment fleet, stock and other fixed assets to its principal customer, ADNOC, on 1 March 2021 for $18 million. Outstanding trade receivables of $12 million were paid in full on 31 March 2021. The group entered into a Transitional Services Agreement (TSA) with ADNOC, which will expire on 30 June 2021, to support the transfer of the assets, during which time it is anticipated that the group's 600 UAE based employees' contracts will be terminated and all colleagues offered re-employment by ADNOC. The successful exit from the Middle East operations is an important strategic step for the Group leaving us well positioned to take advantage of the market opportunities in the UK and Ireland as activity levels continue to improve.”

Vertikal Comment

This is a modestly reasonable performance from Speedy, even allowing for the fact that the pandemic covered the entire financial year. It could have been much worse of course, and at least it has come through all of the challenges with a profit and in a good enough shape from which to resume growth.

The key question however, might be what impact the way it managed the business through the period might have had on its staff and customers?

Only time will tell but having said that this is a considerably better result than many/most will have expected back in the first quarter of the fiscal year.