16.05.2017

Speedy bounces back

UK general rental company Speedy has confirmed its results for the year to the end of March with higher revenues and a return to profit.

Total revenue for the year was £369.4 million up 12.2 percent on the previous year, with contributions from the UK - which represents 92 percent of the business - the Middle East and the Lloyds British Testing acquisition which completed in December. Revenues in the UK and Ireland improved 11 percent (6.4 percent without fleet disposals) to £342.9 million, while the Abu Dhabi based International division which includes a joint venture in Kazakhstan improved 29.9 percent or 12.7 percent without the currency gain.

The company also cut its rental fleet by more than 11 percent which helped improve utilisation and lower the net debt. The company also moved back into the black with a pre-tax profit of £14.4 million, compared to a loss in the previous year of £57.4 million. Net debt at the end of March was £71.2 million, a reduction of 41.5 percent on the year.

Chief executive Russell Down said: “Our partnered services revenue increased 15 percent to £52.2m, reflecting revenue from the heavy plant disposal which transferred to partnered services, and an improvement in revenue from larger customers. Gross margins on core hire revenue declined slightly over the period reflecting the competitive market environment, offset by improvements in asset utilisation, the lower hire fleet and consequently lower depreciation charges. Overhead costs fell by £1.6m, after absorbing £4.3m of bonus costs and the costs of Lloyds British. The regional operating divisions were restructured into two during the year to improve efficiency and enhance accountability and empowerment, this has resulted in cost savings and an improved operational performance.”

"In the Middle East our business is primarily with national government clients in the oil and gas market in Abu Dhabi. In spite of low oil prices the business has grown this year as projects have fully mobilised and new work has been secured. Revenue grew 29.9 percent to £26.5 million of which approximately 50 percent is partnered services. Gross margins have increased slightly and overheads have reduced. As a result, EBITA has increased to £2.1 million. The Group operates a joint venture in Kazakhstan which has performed well this year following cyclical shutdown activity. Profit from JV operations increased to £1.7 million.”

“These results demonstrate the success of our turnaround plan with significant improvements across all financial and operational performance measures. Whilst we have made a solid start to the year, the market remains competitive. With the business now stabilised and a strong balance sheet, we are well positioned to take advantage of market opportunities and continue to deliver sustainable profitable growth.”

Vertikal Comment

It is good to be able to report on a positive outcome for such a large business, at one point it was looking a little rocky for Speedy as some investors tried unseat the chief executive and force a merger with HSS for all the wrong reasons.

The company has made excellent progress and must have really made the changes that it talks about, to make it easier to deal with.
While it may not have the same momentum as A-Plant yet, it has made a remarkable turnaround which will hopefully gather steam as the year progresses.