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Speedy hits its utilisation target

The group has improved efficiency considerably, but further improvement may lie ahead
May 15, 2019

Things are coming together for Speedy Hire (SDY). The results for the year to March 2019 reveal a group very different from when its customer-focused strategy was rolled out in 2016.

IC TIP: Buy at 64p

Utilisation – the amount of time equipment spends out on hire – reached its 57 per cent target. Chief executive Russell Down said better use of analytics could squeeze out further improvements too, although added that the ideal level was largely dependent on the product mix. The improved asset efficiency affected returns on capital employed, pushing it up 130 basis points to 12.8 per cent, although it remains shy of the 15 per cent target.

The group is now one of the biggest players in the UK powered access market, following the acquisition of Yorkshire-based Lifterz in March. Management has invested £52m in the sector since November 2017, and now boasts national coverage and 7,100 machines.

It bought Geason Training in December, building the strength of its services offering. Mr Down said this was an area of focus, with further deals likely. Net debt crept up following the acquisitions, but, at 1.1 times cash profits, is still not a cause for concern.

Broker Peel Hunt forecasts adjusted EPS of 5.6p in 2020, from 4.9p last year.

SPEEDY HIRE (SDY)   
ORD PRICE:64pMARKET VALUE:£336m
TOUCH:63.8-65p12-MONTH HIGH:66pLOW: 53p
DIVIDEND YIELD:3.1%PE RATIO:15
NET ASSET VALUE:40pNET DEBT:42%
Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20153862.10.040.70
2016329-57.6-10.20.70
201736914.42.201.00
201837318.02.711.65
201939527.24.262.00
% change+6+51+57+21
Ex-div:04 Jul   
Payment:09 Aug