Speedy Hire profits fall as government puts off rail improvements
Speedy Hire has reported lower profits amid delays in government spending on major infrastructure projects.
The equipment rental business posted adjusted pre-tax profits of £8.7million in the year ending March, compared to £14.7million in the previous 12 months.
Speedy Hire said the economic environment had remained 'challenging' over the past year owing to delays in government spending on major infrastructure projects.
These include Network Rail's plan to invest £45.4billion on improving the UK's railway infrastructure between 2024 and 2029.
Hire-related revenues also increased by just £1.4million to £255million, which the firm blamed on its trade and retail segment expanding at a slower-than-anticipated pace.
Earnings were somewhat impacted by the early shutdown of contracts in Kazakhstan, where it operates a joint venture.
Speedy Hire's overall turnover slipped by 1.2 per cent to £416.6million, due to lower wholesale fuel prices driving its total service sales down by 2.8 per cent to £158million.
However, the Merseyside-based company continues to invest in its 'velocity' growth strategy, with £57.5million going towards its hire fleet during the year to support recent contract gains.
As part of the strategy, Speedy Hire has also closed eight depots and made some staff redundant in response to the government's hikes in National Insurance contributions and the National Living Wage.
Dan Evans, chief executive of Speedy Hire, said: 'We are focused on what we can control, and we will continue to manage our cost base and balance our investment decisions through the economic cycle. We are well-positioned to capitalise on end-market recovery.
'We anticipate seeing the benefit from a promising pipeline of growth opportunities with new and existing customers, alongside increased commitment and clarity on government spending.'
Headquartered in Newton-le-Willows, Speedy Hire provides equipment, including air conditioning units, power tools, and rubbish chutes, to the construction sector.
It ended the last financial year with net debt £11.8million higher at £113.1million.
Since then, the firm has finalised a £225million refinancing of its borrowing facilities.
Mark Crouch, market analyst at eToro, said the company 'is stuck in a classic catch-22.'
He added: 'To win new contracts, it needs to ramp up capital expenditure, fuelled by debt.
'But with the economy on shaky ground and delays in government spending weighing on major projects, taking on more debt could end up fixing one problem while wrenching open another.'
Speedy Hire shares were 0.4 per cent down at 26p on Wednesday afternoon and have slumped by around 57 per cent in the past five years.
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