Despite concerns over the sharp slowdown in new housing starts, Speedy Hire (SDY), the UK’s leading tool and equipment hire services company posted a resilient first-half trading update and announced a £20 million acquisition.

Speedy shares, which have lost nearly a quarter of their value this year, perked up on the news, gaining 4.3% to 32.65p before settling back at 32p, up 2.2%.

‘SATISFACTORY’ FIRST HALF

While it wasn’t exactly a rip-roaring start to the year due to the decision by major housebuilders to rein in their new-build programmes, the firm saw a small increase in revenue from its national customers which was offset by softer revenue from some of its regional customers.

As is standard, the second half is expected to contribute the bulk of revenue and earnings as winter programmes unroll and new contracts get fully up to speed.

Additionally, the firm says it has ‘a strengthening pipeline of new opportunities going into the second half of the year’ meaning it is confident in meeting full-year expectations.

After a hiccup earlier in the year with its inventory of equipment, the company has improved its internal controls and brought in digital technology to help with stock taking, and happily initial results ‘have not identified the need for any increased inventory provisions’.

GOING GREEN

Speedy recently announced it was forming a joint venture with AFC Energy (AFC:AIM) to help customers cut their carbon footprint by moving to hydrogen fuel generation.

This morning it revealed it had bought sustainable power solutions provider Green Power Hire for an EV (enterprise value) of £20.2 million comprising £10 million of equity and assumed debt of £10.2 million.

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.

It also improves margins, as Speedy previously hired out GPH’s units to its end customers on an ad-hoc re-hire basis, while GPH now has access to the whole of Speedy’s customer base.

WHAT DO ANALYSTS THINK?

Andrew Nussey, analyst at Peel Hunt, commented: ‘Speedy remains on the front foot, maintaining strategic and operational discipline to deliver its growth targets. Investors should be reassured by this statement.’

Meanwhile, the acquisition of GPH ‘looks well timed and enhances the firm’s leading ESG credentials’, added Nussey.

Charlie Campbell at Liberum said the trading update should reassure nervous investors, while widening the range of sustainable equipment with the GPH deal ‘should be successful as this will appeal to major contractors, especially when working for public projects.’

LEARN MORE ABOUT SPEEDY HIRE

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