Speedy Hire, the UK’s biggest revenue-generating equipment and tool rental company, remains on track for impressive growth this year, reporting a jump in revenues for the first-half of the year. In mid-week it told the City that revenues were up 5.3 percent for the six months to 30 September compared with the same period in 2011, with most of the growth being driven by its international business.
While underlying UK revenues had increased by 3.2 percent, the Merseyside-based firm said its international division had seen a 77 per cent improvement in sales due to securing contracts in the oil and gas sectors. Most of the UK growth was the result of winning business providing equipment on lucrative water, energy infrastructure, waste and transport projects, Speedy Hire said.
“To see that revenues have grown 5.3 per cent in an environment such as this is positive, particularly when our main construction market has seen declines,” said Steve Corcoran, the firm’s chief executive. “Against a difficult economic backdrop, we have maintained revenue growth in both the UK and internationally.” The company has an overall market capitalisation of £160m.
Speedy Hire has pursued a shrewd strategy in recent years, trying to mitigate the effects of the slowdown in its core UK market – where its network of 280 depots brings in roughly 90 percent of overall sales – by pursuing lucrative international opportunities. These include a project in the United Arab Emirates, where it is doing business with the support services arm of the state-owned Abu Dhabi National Oil Company. In July it won a £32m contract to supply equipment to the builders of four artificial islands in Abu Dhabi.
While the success of the international division will help to cushion the blow, Steve Corcoran said the UK construction sector was still some way from bouncing back from the crash of 2008, predicting that it would be “15-18 months before we see the market turning to a recovery”. As we reported on Tuesday, the European Hire Association’s latest research on the equipment hire sector came to pretty much the same conclusion.
Speedy Hire shares fell 3.23 per cent to 30p on news of the half-year results, but are up 40 percent over the past 12 months. The Financial Times praised Speedy’s management for the wise decision to “cut the group’s reliance on the construction sector, from 90 per cent of revenues three years ago to two-thirds today.” Its share tipster favours Speedy over its nearest competitor in the hire industry: “Trading on a forward price/earnings ratio of 12, the shares are a shade cheaper than larger rival Ashtead’s on 14, and worth considering.”