HSS Hire says cost savings on track

UK-based rental company HSS Hire has claimed significant progress in reducing its cost structure in a nine-month trading update.

The update came after Chris Davies stepped down as CEO of the company earlier this autumn following a warning from the company that full-year profits would be below market expectations.

In its nine-month update, HSS Hire said revenues were up 10.7% year-on-year to £231 million (€330 million), reflecting strong growth in its HSS OneCall and HSS Training businesses together with a growing revenue contribution from its newly opened local branches.

Revenues in the company’s specialist unit also increased year-on-year, reflecting growth in the power and powered access businesses together with incremental revenue from its acquired business, All Seasons Hire.

Utilisation was up one percentage point year-on-year to 48% in the Core business, and up five percentage points to 75% in the Specialist business.

Earnings before interest, taxes and amortisation (EBITA) stood at £13.8 million (€19.7 million), down from £23.8 million (€22.9 million) a year ago.

HSS Hire said that, after the variability seen in July and August, trading conditions were more stable in September and expectations for revenue growth for the 2015 financial year remained in line with its previous guidance of 8% to 11% ahead of 2014.

The company said it had taken action to reduce its cost base through refining its branch organisational structure, honing its sales teams, and reorganising its customer support call centre.

Looking ahead, it said that revenue growth in 2016 would be driven by the roll out of new local branches, the full-year impact of its All Seasons Hire acquisition, its investment in the Specialist hire fleets and modest underlying growth in its the core business.

HSS Hire added that while it planned to continue to open new local branches, it expected this to be at a slower rate than in 2015.

The company's new CEO John Gill said, “Our revenue growth for the 39 week period ended 26 September, 2015, is in line with our expectations, but the trading environment remains very competitive. We have made significant progress in reducing our cost structure and in developing and growing our specialist businesses.

“As we approach the end of this year we are starting to see the benefits of this cost restructuring, with the full year effect to be realised through the 2016 financial year.

"The pipeline for the branch roll out next year is in place and we are also in the final stages of planning for the opening of our new National Distribution Centre in the first half of 2016, which will drive further efficiency into our network and customer proposition.

“These focus areas are important building blocks for growth in the medium and long term and the Group will update on each of these with the full year results in April 2016.”