HSS Hire (HSS) is making painful operational changes that have seen adjusted cash profits fall 46.7 per cent to £17.1m in the first half: the extra week in the preceding period can't explain that degree of decline. The closure of 68 branches over the past 12 months combined with the ongoing operational overhaul to push revenues down over the period and push up costs, especially exceptionals as the company had to exit onerous leases and take impairments on property, plant and equipment. The equipment hire provider became profitable again in June and grew revenues for the eight weeks following the period, but "at a materially lower level of improvement than expected" at the end of June.
One of the key planks of the group’s changes is the move to a new divisional structure, centralising much of the engineering and distribution. As part of this, 50 branches were closed over the period triggering exceptional expenses of £5m. Combined with impairments and the cost of the efficiency programme, exceptional administrative charges came to £12.9m over the period, close to the £13.4m booked over the whole of 2016.
Analysts at Numis think the pain is not over yet and are forecasting an adjusted pre-tax loss of £15.2m for 2017, giving a loss per share of 7.1p (from a £3.9m profit and EPS of 2p in 2016).
| HSS HIRE (HSS) | ||||
| ORD PRICE: | 48p | MARKET VALUE: | £81.7m | |
| TOUCH: | 46-49p | 12-MONTH HIGH: | 96p | LOW: 42.5p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | NA | |
| NET ASSET VALUE: | 72p* | NET DEBT: | 187% | |
| Half-year to 1 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 (27 weeks, restated) | 166 | -7.8 | -5.34 | 0.57 |
| 2017 (26 weeks) | 161 | -30.1 | -17.8 | nil |
| % change | -3 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £177m, or 104p a share | ||||
