The collapse of Carillion earlier this year does not appear to have slowed down Speedy Hire (SDY). Despite being forced to take an exceptional charge of £2.1m related to its supply agreements with the failed outsourcer, the tools and equipment hire group beat analyst expectations for the year to March 2018. Even so, the lingering sales impact of Carillion's collapse meant Peel Hunt was unwilling to raise estimates for adjusted pre-tax profits of £30m and EPS of 4.6p in the year to March 2019.
Carillion issues aside, these numbers suggest management's focus on efficiency and capital management is paying off. Stripping out underused assets from the fleet has reduced the average age of equipment from 4.2 to 3.8 years, while utilisation is now at 55.4 per cent, up from 51.5 per cent a year ago. In turn, that has pushed up margins, meaning adjusted cash profits climbed 16 per cent to £73m in the period - more than double the rate of revenue growth after excluding disposals.
Stage two of the strategy is improving customer service to ensure the profit growth can be maintained. To this end, the group has released a mobile app and launched a same day delivery service.
| SPEEDY HIRE (SDY) | ||||
| ORD PRICE: | 60p | MARKET VALUE: | £313m | |
| TOUCH: | 58.2-60p | 12-MONTH HIGH: | 63p | LOW: 47p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 38p | NET DEBT: | 35% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 350 | 7.0 | 0.8 | 0.61 |
| 2015 | 386 | 2.1 | 0.0 | 0.70 |
| 2016 | 329 | -57.6 | -10.2 | 0.70 |
| 2017 | 369 | 14.4 | 2.2 | 1.00 |
| 2018 | 377 | 18.0 | 2.7 | 1.65 |
| % change | +2 | +25 | +23 | +65 |
| Ex-div: | 05 Jul | |||
| Payment: | 10 Aug | |||
