- No post-Christmas recovery
- Spending on rail projects delayed
- Contracts terminated at Kazak JV
Equipment rental group Speedy Hire (SDY) issued an unscheduled trading update for the 10 months to the end of January, warning that profitability for the full year to February 2025 would be below expectations.
This comes after chief executive Dan Evans said in November the group would meet full-year forecasts based on a good start to the second half, positive rental revenue growth and early mobilisation of the Amey contract.
The shares slumped 7.5p or 27% to 20p, their lowest level in more than 10 years, leaving them nearly 80% below their pre-pandemic level.
COMBINATION OF NEGATIVE FACTORS
The St Helens, Merseyside-based firm cited a number of headwinds to its full-year outlook, beginning with a slowdown in business heading into the final quarter due to the ‘widely-reported economic downturn’, which resulted in a slower-than-anticipated recovery in demand after the Christmas shutdown across most of its customer base.
The company also blamed the delayed start to CP7 rail works, as highlighted last month by Renew Holdings (RNWH:AIM), for impacting revenue in the final quarter.
Efforts to grow the Trade & Retail proposition have continued, with new trading relationships secured, but it will take until the first quarter of the new financial year which starts in March to reach the levels of revenue the firm had projected.
The issues dogging the group extended to its Kazak joint venture, which experienced ‘a significant downturn in performance’ due to the early shutdown of major contracts and is likely to underperform into the new financial year.
Finally, a higher level of net debt to support capex for new contract wins means interest charges for the current financial year will be higher than expected.
