A first annual profit since 2008 has given plant hire company Speedy Hire something to celebrate. It's wining more lucrative infrastructure work, cutting costs, generating cash and improving margins. Net debt is down a third, too. True, construction is going through a tough time, but it has been a "satisfactory" start to the new year and Speedy shares look severely undervalued.
Management duly delivered the strong second half needed to meet City forecasts, turning in adjusted pre-tax profit of £7.6m compared with £4.8m in the first six months, driven by 4 per cent growth in underlying revenue. Cost cutting helped, too – Speedy has almost halved the number of depots – helping operating margin in the core UK & Ireland business rise from 7.1 to 8.8 per cent. This is a long way from pre-credit crunch margins of 15 per cent, so Speedy has much work still to do.
Winning work with a number of big utilities, especially the water companies, means core regulated infrastructure markets now make up 25 per cent of group revenue and rising. Crossrail is already worth millions to Speedy. Focusing more on services like training, repair and testing, rather than just commoditised supply – the so-called Project Darwin – should also increase returns.
Broker Investec expects current year adjusted pre-tax profit to rise a third to £16.5m giving EPS of 2.4p (1.7p in 2012).
SPEEDY HIRE (SDY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 25.25p | MARKET VALUE: | £131m | |
| TOUCH: | 24.5-25.75p | 12-MONTH HIGH: | 34.5p | LOW: 18.5p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 77 | |
| NET ASSET VALUE: | 44p* | NET DEBT: | 33% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 466 | 30.5 | 13.0 | 5.37 |
| 2009 | 483 | -71.1 | -29.6 | 3.47 |
| 2010 | 351 | -22.8 | -4.40 | 0.40 |
| 2011 | 354 | -27.0 | -3.81 | 0.40 |
| 2012 | 329 | 3.2 | 0.33 | 0.46 |
| % change | -7 | - | - | +15 |
Ex-div: 13 Jun Payment: 15 Aug *Includes intangible assets of £58m, or 11p a share | ||||
