Speedy Hire pulls out of general rental in Middle East

UK-based rental company Speedy Hire has reported strong overall first half results, but has taken action to scale back its struggling Middle Eastern business.

The company reported a 12% year-on-year increase in group revenues for the six months to the end of September to £189 million (€239 million), while group earnings before interest, tax, depreciation and amortisation were up 23% to £37.5 million (€47.4 million).

Chief executive Mark Rogerson said the improving UK market had fuelled the positive results, but he added that while remedial actions taken in the Middle East had stabilised the business, they had not yet delivered the expected improvement in performance.

It has been a tumultuous time for the group in the Middle East, where accounting regularities led to a full-year loss for 2013.

“We have now completed an internal review of the Middle East operations and a strategy is being implemented to stem losses and to build and realise value,” Mr Rogerson said.

“It is clear that the continued under-performance of the business is primarily the result of a legacy cost base and weak demand for general and spot hire."

General rental exit

Mr Rogerson said the company would now exit the general and spot hire market in the Middle East, and as existing contracts came to an end, would progressively dispose of or return assets to the UK.

“This programme will be completed by no later than the end of the first quarter of 2016, and we are working hard to bring this timetable forward,” he added.

However, this is not the end of the company’s operations in the Middle East. Mr Rogerson said Speedy had identified value in its oil and gas services business, which has delivered strong revenue growth from long term contracts.

“We will complete the mobilisation of our largest oil and gas services contracts, and exploit further immediate opportunities from recently signed services contracts to build value in the short-term whilst concurrently looking at a number of strategic options for this part of the business,” he said.

Mr Rogerson added that the company was on-track to deliver results for the full year in line with expectations.