HSS reports weakening UK environment
02 October 2023
HSS Hire said the UK’s weak economic environment had led to a considerable slowdown of its rental business in the third quarter of the year, with significant volatility in demand and softness in markets like housing, repair and maintenance and fit-out.
Sales in its rental division were up 2% year-on-year in the first half of 2023 but declined by 4% in the third quarter of the year. Its services division – training and the OneCall re-rental business - saw a 14% year-on-year increase in the third quarter after a 6% increase in the first half of the year.
HSS said it was responding to the slower market by taking action to minimise costs, with around £6 million of cost reductions expected in the second half of the current year.
Sales in the first half year were 6.3% up at £170.1 million, with EBITDA profit down 2.6% to £32.1 million.
The company has a new divisional structure, comprising ProService (its ecommerce marketplace for the supply of building materials and equipment, as well as training), Operations (more traditional rental of equipment owned by HSS), and its operations in Ireland.
As part of its strategy, HSS is shifting its traditional rental depots into “low cost builders merchants” locations. It now has 67 such locations in partnership with 19 builders merchants, and in the second half of this year will transition a further 16 traditional branches to 20 new builders merchants.
The online equipment and materials marketplace – where customers can buy a wide range of products – now employs 100 people in Manchester. The marketplace has 67 customers using the system, whose spending from January to August this year increased by 50%.
Steve Ashmore, Chief Executive Officer, said: “The macro environment has become more challenging from July; we have experienced significant volatility of demand in our rental segment over the last few weeks which has widened the range of possible performance outcomes for the balance of the year.
“However, this will be temporary, and we therefore plan to leverage our robust balance sheet to sustain investment in the business, implementing our strategy to ensure that HSS can take full advantage of the market when it recovers.”
Ashmore said the first half results reflected a “strong underlying performance driven by continued double-digit growth in our capital-light Services segment…our marketplace proposition continues to develop for our customers and suppliers.
“The early results underpin our confidence in our transformational strategy to be the leading marketplace for equipment services and as such we will continue to invest in the balance of 2023 to build upon this success.”