28th Sep 2015 06:50
LONDON (Alliance News) - Tools, equipment and plant hire company Speedy Hire PLC issued a profit warning on Monday morning, saying the resolution of its legacy issues is taking longer than anticipated and adding that the actions taken to cut costs in the business will flow through in the second half.
The company's first half ends on Wednesday.
Speedy said that due to issues in dealing with legacy issues in the business and with its core hire revenue in the UK and Ireland set to be around 10% lower year-on-year, the company said its results will be heavily weighted to the second half and will be materially below current market expectations.
The group said it has taken a number of actions to cut costs and mitigate the challenges it currently faces, including attempting to improve asset availability, a realignment of its sales structure, and improvements to its IT systems, but these will not have an impact until the second half of its financial year to the end of March 2016.
The group said the benefits in the second half will include overheads falling by GBP13.0 million year-on-year, with GBP10.0 million of this relating to actions taken in the UK and Ireland and GBP6.0 million of that coming from cutting staff costs.
Speedy said its Middle East business is continuing to break even at the operating profit level, with further opportunities in the market to increase revenue and grow margins.
"Following the extremely disappointing start to the year, we have taken action to grow revenue and cut costs. Whilst these actions will take time to come to fruition, we believe they will deliver material benefits over the medium term," said Executive Chairman Jan Astrand.
By Sam Unsted; [email protected]; @SamUAtAlliance
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