Speedy cuts again as restructuring continues

19 October 2009

Speedy Hire is to make further £30 million cost savings during the current financial year (to 31 March 2010) in response to continued weakness in its markets.

The company, which reported an approximate 29% fall in revenues for the six months to 30 September in an interim trading statement, said the business environment had become more stable but that non-residential construction remained weak and there was little sign of the traditional September-October pick-up in sales.

Around 270 jobs have been lost in the first half of the year - equivalent to 6% of the total - and 19 depots have been merged with other sites. The company now has around 350 sites in the UK and Ireland. However, Speedy said it would be inappropriate to reduce the network any more "as this would begin to impair customer service".

Speedy said revenues for the full year were likely to be lower than previously forecast, although it said EBITA (earnings before interest, tax and amortization) would be in line with expectations "because of the aggressive and pre-emptive approach taken to its cost base".

The company said that "with no sign of improvement in private sector spending and increased sensitivity around the sustainability of Government spending, there is still significant uncertainty in the current outlook for construction".

Meanwhile, the company's restructuring project - internally known as Project Darwin - continues, with the company now split into new operating divisions including: the UK & Eire Asset Services division led by Claudio Veritiero, which includes the traditional UK hire operation; an International Asset Services division led by Mike McGrath; and the Branded and Advisory Services division managed by Patrick Rawnsley.

The international division is running the recently announced outsourcing venture with Al Futtaim Carillion in the Middle East, for which £3.5 million in new fleet has already been invested.

The company aims to extend this ‘full outsource' model to other customers in the Middle East and elsewhere. The Branded and Advisory services division will be responsible for Speedy's training and consultancy services.

The UK depot network, meanwhile, continues to be restructured, although the focus now is on relocating rather than closing further sites. As part of this, Speedy is creating a network comprising three different types of location: large Multi Service Centres, Superstores and ‘Express' locations.

The Superstores, the first of which are scheduled to open soon, will function like a large supermarket, with separate managers for different equipment sectors such as surveying and tools.

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