01.07.2015

All change at Speedy

UK rental company Speedy has issued a trading update warning that it is lowering its forecasts for this year and that its chief executive Mark Rogerson has resigned. The deal to sell its last operations in the Middle East has also fallen apart.

The company said that its first quarter which began in March has got the off to a slow start and blames the poor performance on A lack of available equipment during its network optimisation programme, a focus on strategic accounts at the expense of small and medium sized customers and poor customer service caused by disruption during the implementation of a new IT and MI system.

It added: “Whilst core hire trading across strategic accounts remains strong, without an improvement in revenue trend, and ahead of any delivery of the remedial programmes, the result for fiscal year 2016 will be materially below the board’s expectations and the reported result for FY2015”.

“Further to our recent announcements regarding the sale of the remaining Oil & Gas business in the Middle East, discussions with the third party concerned have not reached a satisfactory conclusion and have been discontinued. The board continues to explore and evaluate options for this business which, as previously advised, is operating at a break even position”.

Finally as a result chief executive Mark Rogerson is leaving, with Jan Åstrand, who was appointed non-executive chairman in late-2014, has assumed the role of executive chairman, while finance director Russell Down takes over as chief executive with immediate effect and will also retain the finance role until a replacement is appointed”.

Åstrand said: “This is extremely disappointing. I believe that Speedy remains a fundamentally good business but, whilst some progress has been made over the last year, the remedial action programmes have not been delivered as needed. Our immediate priority is to accelerate the execution of those programmes and realise the upside we believe they will deliver over the medium term. Additionally, we will increase our focus on the SME core hire market”.

“Improving performance is our top priority. We expect to be able to provide an update when we issue our half year pre-close statement which will be in the last week of September.”

Vertikal Comment

This is an unexpected announcement Rogerson joined Speedy in December 2013 and was promoted to the top job after Steve Corcoran resigned after the discovery of accounting irregularities at its International division. He has had less than 18 months to make an impact, although it sounds like the implementation of the various change programmes have been implemented at the expense of customers, causing the company’s revenues to fall. Add to this and the failure to close the Middle East deal and a head almost had to roll.

Based on feedback we receive Speedy is probably in better shape than the trading update might suggest and while its current year might be worse than projected, this is no time to write it off. Expect performance to improve during the year ready for stronger progress next year.