Speedy Hire’s share price tumbles -27% on a profits warning

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Speedy Hire’s (LON:SDY) share price has fallen sharply as it warns on profits amid slow trading and economic uncertainty

Speedy Hire Plc, which offers tool and equipment hire to the construction, infrastructure and industrial markets, has issued a trading update today which amounts to a profits warning.

Despite posting growth in the quarter to December 2024, in which its hire revenue grew by +5.0% year-over-year, the company is now facing several issues that are likely to impact profitability.

The post-Christmas period has seen Speedy Hire experience a slower-than-anticipated recovery from its customer base, perhaps due to the economic uncertainty in the UK, post the Autumn budget.

In addition too which, delays in CP7 rail works (CP7 is Network Rail’s 5-year plan or Control Period) have also helped to depress trading in the final quarter, although this delay now presents a significant opportunity for FY2026.

The company’s strategic initiatives have shown mixed results, the implementation of its Amey contract is proceeding as planned. However, the development of Speedy Hire’s Trade & Retail division is taking longer than expected to generate revenue levels anticipated from the hire business.

These revenues are now thought likely to be generated in the first quarter of FY2026.

Speedy Hire’s joint venture in Kazakhstan has also run into difficulties, due to the early termination of major contracts. Though once again Speedy Hire anticipates further opportunities here, going forward.

Looking at the company’s finances, net debt is expected to reach approximately Β£123.0 million this year, up from Β£113.0 million in January 2024.

This rise is primarily due to capital expenditure/investment on new contract wins.

The increased debt burden will result in higher interest charges for FY2025, although the company still expects strong cash inflows in the final two months of the financial year.

Despite these challenges, Speedy Hire remains committed to its strategy and believes it has a promising pipeline of growth opportunities.

The company should benefit from increased government infrastructure spending and railway nationalisation (?) both offer potential bright spots on the horizon.

Management is focusing on curbing costs, and right-sizing investment decisions, in relation, to the current economic climate.

The Board’s expectation of lower full-year profitability reflects both weak post-Christmas trading and wider macroeconomic uncertainty, and the board seems likely to maintain a cautious outlook for the immediate future.

However, if the opportunities in Kazakhstan and those with Network Rail do bear fruit next year, then this could be just a temporary downturn.

In that case, the -27.0% fall in the share price today can’t be justified.

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