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Strategic overhaul at Speedy Hire

Speedy Hire has had a difficult first-half, which new chief executive Russell Down is trying to leave in the past
November 10, 2015

To say tool hire specialist Speedy Hire (SDY) has undergone a challenging half-year trading period would be an understatement. Sales suffered as the group failed to focus on its small- and medium-sized enterprise (SME) customers, while poor implementation of new IT and management information systems resulted in equipment shortfalls in depots. "For me, the business last year was very internally focused," says newly installed chief executive Russell Down. "We didn't focus as much on our customers as we should have done."

IC TIP: Hold at 32p

Mr Down, the former group finance director, has set about introducing a series of remedial measures. The business has been restructured so that sales, operations and engineering functions are included in each of its divisions, including power and rail. Management has also realigned its sales forces to its SME customers, introduced initiatives for these regional and national customers, and cut middle management. In total, the group incurred £14.2m in one-off charges, which were included within administrative costs. This fed through into an operating loss of £11m, against a profit of £9.1m in the corresponding period in 2014. However, management estimates the company will make £13m in administrative cost savings through to the March year-end.

Broker Peel Hunt expects adjusted EPS of 0.7p for the March 2016 year-end, down from 3.2p in 2015.

SPEEDY HIRE (SDY)

ORD PRICE:32pMARKET VALUE:£164m
TOUCH:31-32p12-MONTH HIGH:81pLOW: 28p
DIVIDEND YIELD:2.2%PE RATIO:na
NET ASSET VALUE:42p*NET DEBT:47%

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20141895.30.60.3
2015165-13.5-2.20.3
% change-13---

Ex-div: 17 Dec

Payment: 29 Jan

*Includes intangible assets of £47m, or 9p a share