Profits elude Speedy but pricing and volume improving
By Murray Pollok17 November 2010
Challenging market conditions in the UK are making it difficult for Speedy Hire to return to profit, but the company said trends in pricing, volume and revenues were improving and that it was continuing to make good progress in its new Middle East business.
Speedy's revenues for the six months to 30 September were £177.3 million, down 4.1% on the same half year in 2009. Pre-tax losses more than doubled to £9.9 million in the period.
UK hire revenues were down 6.7% to £174.7 million and the company's recently established international and advisory services division, which includes the Middle East operation, reported revenues of £4.5 million for the six months, up from less than £1 million in 2009.
Speedy said that its financial year started weakly but more recently trading has been more encouraging, with quarter on quarter growth in revenues, volumes and average hire rates seen over the last three quarters. It said the trend had been continued in October, with revenues up approximately 5% on the same month in 2009.
David Wallis, Speedy's chairman, who retires at the end of the year after 10 years on the Speedy board, said UK revenues, average hire rates and volume trends were now showing "progressive improvement", although market conditions remain challenging.
He said Speedy was well positioned to capitalise on market recovery; "In particular, the Group's on-site facilities on the Olympics project, recent contract wins in construction and non-construction markets, growing international presence and developing non-hire activities provide grounds for confidence for the future, especially as these are now supported from a more efficient operating base."
In the UK, Speedy said its five year sole supplier agreement with Thames Water on the £5.5 billion AMP5 investment programme will generate rental revenues of around £45 million. Speedy has also been awarded a one year rolling contract by Balfour Beatty granting preferred supplier status for non-operated plant. Balfour Beatty currently spends over £45 million a year on non-operated plant and Speedy said the contract represented a "significant opportunity".
Speedy said its international division was making good progress. In addition to its alliance with Al Futtaim Carillion, it has also signed a three year agreement with Costain Group for equipment on Das Island, Abu Dhabi's offshore oil and gas complex, as well as a 12 month contract worth more than £1 million with QMENA for a Saudi Aramco project in Saudi Arabia.
David Wallis's successor as company chairman will be Ishbel Macpherson, Speedy's senior independent director, who joined the board in 2007.