05.04.2017

Losses continue to mount at HSS

UK rental company HSS has reported higher revenues for 2016, but has incurred higher losses.

Total revenues were 9.6 percent higher at £342.4 million, although rental revenues were flat for the year. Pre-tax losses were £17.4 million, up from a loss of £13.8 million the prior year. The company cut capital expenditure in half to 42.4 million, while net debt edged up a little to £219.4 million, in spite of s modest equity injection at the end of the year.

Chief executive John Gill said: “2016 was a year of significant operational change and investment for the Group. The result is an enhanced operating platform that will enable us to deliver superior fleet availability to customers right across our network, creating the foundation for future sustainable profit growth. While we made good progress in key accounts, specialist rental and our fast-growing Services business during the year, this was not matched by revenue growth in our core Rental business and re-establishing momentum in this area is our primary focus in 2017 and beyond.”

“With our new platform in place that we can now optimise and then leverage, we are firmly focused on pressing home our competitive advantage to drive growth in Rental revenues, particularly in our smaller and medium sized accounts. In particular, we appointed a Chief Commercial Officer in early 2017, with the objective of strengthening our customer proposition throughout our network. While we remain at the start of this journey, there are some encouraging initial signs that this strategy is beginning to gain traction in key markets such as London. In tandem, we will continue to grow our capital-light Services businesses, One-Call and HSS Training, where we are seeing strong demand from both existing and new customers. We expect to see the benefits of these activities deliver margin improvement in the second half of 2017”

“Our markets remain competitive on price, but the initiatives implemented over the last 12 months - and the ongoing programme of network optimisation - have strengthened our capabilities and leave the Group well positioned to continue to serve our existing and future customers.”

Vertikal Comment

HSS is has been making significant changes and cost reductions, but is still struggling and has built up something of a reputation for paying suppliers very slowly. The market in both the UK and Ireland has been good, but HSS has not yet benefitted from that.

It will have a major battle against competitors such as Speedy – which seems to have got back onto a firmer footing – and A-Plant which is going from strength to strength. It is possible that the failure of Hewden will provide a small boost – However many of the key areas where HSS and Hewden competed are now in the hands of others who may prove to be more aggressive?

It will be interesting to see how the first half ends up.