As flagged in June's trading update, HSS Hire's (HSS) adjusted half-year cash profits were flat on 2014 at £28.9m. Management blames weaker demand in the facilities management and building fit-out end-markets, as well as the cost of its branch roll-out programme. Variability in its key markets has dragged into the second half. As a consequence, management now expects full-year earnings will be behind consensus expectations, with revenue growth of between 8 and 11 per cent. The shares subsequently fell by more than a third.
The mature core business generated revenue growth of 9 per cent to £125m, while the group's specialist business - which provides climate control, powered access and cleaning hire equipment - grew almost a third to £21.3m, helped by the acquisition of All Seasons Hire. Chief executive Chris Davies says this is because, post-IPO, the group invested in growing the sales force of its specialist businesses and giving them access to its core clients.
The group opened 27 new branches during the period, which dragged on profits. And owing to increased capital expenditure on new fleet in 2013/14, depreciation costs also rose more than a third to £26.6m.
Broker Numis Securities expects adjusted EPS of 4.5p for the full year, up from 2.8p in 2014.
HSS HIRE (HSS) | ||||
---|---|---|---|---|
ORD PRICE: | 83p | MARKET VALUE: | £128m | |
TOUCH: | 82.5-83.75p | 12-MONTH HIGH: | 220p | LOW: 76p |
DIVIDEND YIELD: | 0.7% | PE RATIO: | 15 | |
NET ASSET VALUE: | * | NET DEBT: | £197m |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2014 | 131 | -11.1 | -19.6 | 0.00 |
2015 | 146 | -14.1 | -10.5 | 0.57 |
% change | +12 | - | - | - |
Ex-div: 3 Sep Payment: 1 Oct *Negative shareholders' equity |