After watching its share price fall for several months, Speedy Hire has sought to convince investors about the robustness of its key markets. The UK’s largest tool and equipment hire group has been hit by fears that a downturn in construction activity will pummel its business. Concerns have been exacerbated by last year's £115m acquisition of Hewden Tools, which raised debt and created integration risk.
However, Hewden has now been fully integrated at a cost of £10m and is on track to produce cost savings of £20m a year. Excluding the integration charge, adjusted pre-tax profits were19 per cent ahead. And while the group has seen a significant slowdown in the house building and office development markets, this is a relatively small amount of the overall business and the weakness has been mitigated by rising infrastructure spending. What’s more, one third of group revenue is now generated outside the construction sector in areas such as the petrochemical, nuclear and rail markets.
Should the going get tougher, though, Speedy should benefit from its ability to generate cash by reining in capital expenditure. Broker Panmure expects 2009 adjusted EPS of 97.7p (2008: 73.9p).
| Speedy Hire (SDY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 689p | MARKET VALUE: | £351m | |
| TOUCH: | 688-690p | 12-MONTH HIGH: | 1,330p | LOW: 670p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 469p* | NET DEBT: | 107% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 170 | 21.2 | 42.3 | 10.5 |
| 2005 | 207 | 24.5 | 42.8 | 12.3 |
| 2006 | 254 | 30.7 | 50.4 | 14.3 |
| 2007 | 336 | 36.4 | 58.7 | 17.0 |
| 2008 | 466 | 30.5 | 47.9 | 19.8 |
| % change | +39 | -16 | -18 | +16 |
Ex-div: 25 Jun Payment: 26 Aug *Includes intangible assets of £127m, or 250p per share | ||||
