March 26, 2018 / 6:37 AM / a year ago

Speedy Hire sees full-year profit ahead of expectations

(Reuters) - Industrial equipment rental company Speedy Hire Plc (SDY.L) said on Monday its expects full-year adjusted pretax profit to be ahead of expectations and it had reduced its hire fleet as part of a fleet optimisation plan.

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

Average asset utilisation for the eleven months to February 2018 was 55.4 percent, up 4.3 percent from the previous year, the company said.

Liberum, which reiterated its “buy” rating on the stock, said the improvement in utilisation suggests that the company is successfully executing its strategy to optimise fleet and improve the underlying performance of its core rental business.

The company, which works with customers in the construction, infrastructure and industrial markets, also said return on capital employed (RoCE) for the year ending March 31 is expected to be about 11 percent, up from 7.7 percent in the prior year.

“Crucially, not only is the 11 percent RoCE expected in FY18 well ahead of our previous forecast of 9.9 percent, it is also the first time in a decade that the group has generated a return at or above its cost of capital,” brokerage Liberum added.

Reporting by Radhika Rukmangadhan in Bengaluru; Editing by Sunil Nair

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