Speedy Hire (LON:SDY) has signaled that it is fully through a transformation process and clearly focused on profitable growth. H1 revenue (ex-disposals) was almost 7% higher, at £183m, and management flagged that it expects to exceed previous adjusted PBT expectations for the full year by c 6-7%, which will form the base for future years. The positive results, benefiting from the recent operational restructuring, two recent bolt-on acquisitions and positive demand, point to sustained investor support.
Operational performance is better and it shows
The main operational reason for the improved H1 performance was better fleet utilization, up 6% to 55%. That was combined with increased sales of consumables and training and cost reductions. The company indicated it is currently satisfied that in terms of IT, depot structure and operational methods it is performing well with some room for further improvement. Procurement is also making a contribution.
Confidence in expansion plan
Speedy is seeking UK expansion through growing the fleet once again (after restricting it in recent years to adjust the product mix and reduce capital employed), increasing services revenue (training, partnered services and testing) and making more bolt-on acquisitions. The Middle East operation is stabilized but non-core in the mid-term; it has shown improvement but with revenue at just 8% of the group total it is a distraction, in our view. Investor pressure for a tie-up with HSS is no longer in the public domain, which permits the focus on expanding and improving.
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