Saturday 21 April 2018

Speedy Hire shares jump on higher earnings forecasts despite Carillion collapse

Shares in the tools and equipment hire company were up more than 7.6%.

Business stock
Business stock

By Kalyeena Makortoff, Press Association City Correspondent

Speedy Hire shares jumped more than 7% after the tools and equipment hire company said it was expecting higher earnings despite the recent collapse of client Carillion.

The firm said it was expecting a boost to both revenues and profits for the year to March 31, having reduced its fleet and seen its recent acquisitions perform in line with expectations.

“As a result of the group’s renewed focus on both SME customers and services revenues, and despite the recent liquidation of Carillion, full-year revenues before disposals are expected to be approximately 6% ahead of the prior year,” Speedy Hire said in a trading update.

“Adjusted profit before tax for the year is expected to be ahead of the board’s previous expectations,” the company added.

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The news sent Speedy Hire’s shares up as much as 7.6% in morning trading.

Speedy said in January that any profit impact from Carillion’s liquidation would be recorded as an exceptional non-underlying charge in its income statement for the year ending March 31.

It had been a supplier of hire equipment and services to Carillion, saying at the time that revenue from all Carillion entities were around £12 million for the year to December, while outstanding debt had been £2 million.

However, a proportion of that revenue and debt was related to joint ventures with third parties which were expected to continue unaffected.

Speedy Hire – which is set to release its full-year earnings on May 16 – said net debt was likely to come in at around £80 million after spending £23 million on acquisitions, while average asset use for the 11 months to February was 55.4% – up 4.3% from a year earlier.

Despite Speedy’s upbeat profit expectations, Liberum said it was maintaining its current forecasts for the firm.

“Given the broader market uncertainty, we believe it prudent to leave our estimates for FY19 and beyond unchanged,” a research note by Liberum analysts Rahim Karim and Joe Brent said.

“However, should Speedy be able to renew all of its Carillion contracts, and assuming the market environment remains unchanged, we believe that the balance of risks to our estimates lies to the upside.”

Press Association

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