- Shares fall on full-year warning
- Slower demand and mild weather to blame
- New contract win benefits to come later than expected
Shares Speedy Hire (SDY) sank 17% to 29.9p after the tool and equipment hire company said full year profit to the end of March would be below prior expectations.
Today’s fall is the biggest since 22 November after the company reported a 58% drop in first half profit but forecast a strong second-half weighting.
That recovery hasn’t happened as planned, with challenges faced across the construction sector resulting in revenues from national customers up 3% year-on-year compared with 5% at the end of the first half.
Adding insult to injury, the mild weather has impacted the sales of seasonal products while the company has also seen some delays in mobilisation of ‘significant’ contract wins.
DELAYED BENEFITS
In the third quarter the company secured new multi-year contracts from national customers which are expected to generate annual revenues of over £40 million.
While these contracts represent ‘attractive’ growth opportunities, the delays mean they are expected to have only a marginal benefit in 2024 with the full benefit coming in the 2025 financial year.
The company said it was pleased with the contract wins and the new business has been secured with ‘good’ pricing discipline, demonstrating the attractiveness of Speedy’s customer proposition.
In addition, supply chain benefits from implementation of the Velocity strategy launched in July 2023 are being seen in the second half and will continue to deliver benefits in future years.
B&Q PARTNERSHIP GOES DIGITAL
After previously announcing that a partnership with B&Q owner Kingfisher (KGF) was evolving to a more digital-focused model, the company confirmed today that its products and services are available for digital hire in-store within every B&Q and Tradepoint.
The firm said its acquisition of sustainable power solutions provider Green Power Hire in October continued to perform in line with its business plan.
GPH specializes in supplying BSUs or battery storage units for rent to the UK construction industry, and the acquisition positions Speedy as the market leader at a time when more and more tenders specify the use of BSUs.
