30th May 2022 14:38
(Alliance News) - Speedy Hire PLC's strong results, issued on Monday, show the company is firmly back on the path to growth, after suffering from a tumultuous time during Covid as sales of for-hire tools suffered from the various Covid lockdowns.
"Speedy's full year results to March showed strong recovery from 2021, as expected, and adjusted pretax profit was also ahead of 2020. The highlights were rising utilisation and margin in hire, despite the biggest investment in UK fleet this cycle," Liberum analyst Charlie Campbell said.
Shares in St Helens-based Speedy were 4.2% higher in London on Monday at 47.70 pence each.
For the financial year that ended on March 31, the tools and equipment hire services company reported revenue up 16% to GBP386.8 million, compared with GBP332.3 million a year ago.
Pretax profit more than doubled to GBP29.1 million from GBP8.3 million.
Andy Murphy, director at investment research firm Edison Group, said: "Its participation in major infrastructure and energy projects has aided growth, with adjusted pretax profits reaching GBP30.1 million in the year ended March 2022, up 72% from 2021. Revenues increased as recent price increases have been successful in offsetting considerable cost pressures in the first quarter.
"Speedy made significant investments in its hire fleet to satisfy customer demand, while selling its Middle East operations to generate cashflow."
Speedy Hire declared an annual dividend of 2.20 pence per share, up 57% from 1.40p a year ago. It also noted a GBP30 million share buyback programme began in January.
Liberum said the shareholder payout was larger than it expected.
"We believe that Speedy has continued to gain share with the largest customers through its superior service offering and its broadening portfolio of low carbon equipment," Liberum's Campbell said. "Its other trade customers have responded well to increased availability and improved service. Its B&Q venture is helping it grow with consumers. Its improved digital customer proposition should also be helping to raise market share."
Speedy Hire said financial 2023 is off to an "encouraging" start, with underlying revenue 8% ahead of the comparative period in the most recent year. Volume growth and price increases have more than offset the inflationary cost pressure, it explained.
"The group's outgoing CEO, Russell Down, has also overseen significant investment in developing a retail business in partnership with B&Q, having established a presence in 36 stores, while diversifying its omni-channel proposition to increase customer reach," Edison's Murphy added.
Down announced earlier this month he was retiring after seven years with the company. Down joined the tools and equipment hire company in 2015 as finance director in April of that year, before becoming CEO just months later in July. Down will continue until a successor is in place. Speedy Hire said it has started the hunt for his replacement.
Speedy Hire said it remains confident of achieving its expectations for the current financial year.
Chair David Shearer said: "I am pleased with the company's performance this year and that revenues are now ahead of the pre-Covid-19 period. We have a strong market position allowing us to take advantage of positive end markets and deliver continued sustainable growth. The board looks forward with confidence for the year ahead."
Liberum said the firm's valuation is "compelling".
"We understand investors' concerns about the outlook for UK construction, based around the impact of inflation and rising rates on household, corporate and government budgets," Campbell said.
"However, we note that government appears highly committed to its infrastructure programme and we are confident that housebuilders are likely to aim to grow volumes in 2023 even if house price inflation slows. We expect RMI to surprise on the upside as the home has become a higher priority for cash flows and as capacity constraints meant that not all work planned in 2021 has yet been completed."
By Paul McGowan; [email protected]
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