Speedy Hire Cuts Costs, Faces Future Uncertainty

In a trading statement issued ahead of Speedy Hire’s half-year results for the six months through September 30, Speedy said pre-tax profit is expected to be in line with the same period last year, but warned that the future outlook for the business is becoming increasingly difficult to predict. The Newton-le-Willows, England-based firm, the United Kingdom’s largest equipment rental company, said it has cut costs, including a 4-percent headcount reduction by the end of September, amounting to about 200 jobs. The company has also reduced capital expenditures from a planned £100 million-plus to about £75 million (about U.S. 128 million).

The company expects revenue for the first half to be about 22 percent up year over year, assisted by the £115 million acquisition of Hewden Tools in August of 2007.

Speedy said uncertainty in the credit markets is impacting overall business activity and reducing confidence in the general construction market, its government and regulated industry projects continue to do good levels of business.

The group’s two principal divisions, Tool Hire and Equipment Hire expect revenue to jump 21 percent and 25 percent respectively.

Net debt at the end of September was about £280 million (U.S. $473 million), within its £325 million of committed bank debt facilities. Speedy said it continues to target a net-debt reduction by the end of the year.

“Financial constraints and economic uncertainty have also led to some new projects being delayed or deferred,” the company said in its statement. “Looking forward, while the group continues to draw confidence from the strength of the order books of its key national contracting customers, which has converted into increased spending, it recognizes that, without an improvement in the financial and economic climate, there will continue to be pressure on both its clients and their clients.”

The company said spending on infrastructure-related projects remains strong in both the public and regulated sectors, but reduced activity in other areas, such as residential, commercial, retail and mixed-use development, has become more pronounced in recent months.

“This, together with the completion of existing projects, has seen the overall construction market continue to contract, resulting in a significant decline in revenues from the smaller and mid-tier customer base,” the company added.

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