15.07.2008

Speedy reports strong start

Speedy Hire, the UK’s largest equipment rental company has reported a strong start to its new financial year with first quarter revenues up by over 36 percent on the same period last year. Like for like sales – excluding acquisitions – were up by over 10 percent.

The Hewden tool hire business, which was acquired in August of last year, its addition helped tool rental revenues to climb by 46 percent, while equipment rental revenues increased by over 31 percent including contributions from the Amec LSS and Carillion Asset Management acquisitions completed in February and May.

These additions helped sales to its top 50 contractors jump by 53.6 percent compared to the first quarter 2007.

David Wallis, Speedy’s chairman said: “As reported recently in statements from major contractors such as Balfour Beatty, Carillion, Costain and Galliford Try, construction activity levels are being largely underpinned by infrastructure related spending in the public and regulated industry sectors.”

“This has contributed to Speedy Hire enjoying a 53.6 percent increase in Q1 revenues from its top 50 contracting group customers. Other factors contributing to this growth include a continued move towards outsourcing and greater focus by major customers on supply chain efficiency and quality.”

“Asset turn (annualised hire revenue divided by average net book value of hire equipment), which is used internally as a key measure of the effectiveness of asset utilisation, has improved in both divisions. In the Tool Hire division the estimated Q1 figure was 1.35x (prior year period 1.32x) and in Equipment Hire it was 1.17x (0.97x).”

“Specific sectors of the construction industry are seeing a slowdown in demand and construction related output in house building (to which the Group*s direct exposure is less than 5% of revenue), commercial office development and non-food retailing is likely to remain weak for the foreseeable future. In connection with this, the Group has recently seen a deterioration in spending from smaller trade customers and others more reliant on consumer and certain retail related construction output.”

“However, public sector spending on schools, health, prisons and defence remains resilient, with many of these projects being funded through committed PPP or PFI schemes. Regulated industries, such as water, electricity, gas, rail and airports, are also releasing significant workload. Additionally, in the private sector large infrastructure projects, such as the £250m Hutchinson Ports development at Felixstowe Docks, and food retailing remain positive.”

“In addition, non-construction related activity with major industrial groups, such as those within the petrochemical, pharmaceutical, steel, nuclear and rail sectors, which represents approximately 30% of turnover, also continues to provide growth opportunities.”

Speedy does not release more detail with its quarterly statements, its next full report with be when it releases its interim – half year – results later in the year.