Speedy Hire hits positive note after cost-cutting fix
S peedy Hire’s board says it has enjoyed a better-than-expected few months of trading amid a bitter battle for control of the tool hire business, after it won new contracts and cut overhead costs.
The FTSE Small Cap company, which rents out tools and plant equipment, has been fending off calls by activist investor Toscafund for a boardroom shake-up at the struggling business over alleged corporate governance issues.
Liverpool-based Speedy Hire today said sales and profits for the six months to September 30 had come in ahead of expectations after a drive to fix the business, including cutting nearly 300 jobs – boosting its forecasts for the year.
“The recovery plan has stabilised the business and continues to drive improved performance,” said Speedy Hire’s board, which is led by chairman Jan Astrand, who ends his executive status today.
Toscafund, which is Speedy Hire’s biggest investor with nearly 20pc of the company’s shares, has so far failed to oust Mr Astrand and have its own nomination, David Shearer, appointed to the board.
T he fund manager, which is controlled by Martin Hughes, said Mr Astrand’s executive chairman status had breached corporate governance rules.
At a general meeting held earlier in September, just 37pc of investors voted to remove Mr Astrand, although Toscafund managed to get former Mouchel chairman Mr Shearer into the boardroom with 53pc backing.
Analysts currently predict Speedy Hire will post a 2pc lift in sales to £334m in the year to March 31, and turn a £9.9m pre-tax profit from mammoth £57.6m losses the previous year.
“We anticipate further progress and the board expects that the full-year profit before tax will be ahead of its previous expectations,” Speedy Hire said.
I t comes after a torrid year for the company, which churned out two profit warnings and lost its chief executive, Mark Rogerson, before posting its huge losses, which were worse than expected.
Chief executive Russell Down said the business had been cutting £13m in costs, including shedding nearly 300 jobs, while also making its back office more efficient.
Shares in Speedy Hire, which has lost half its market value since summer 2015, enjoyed a 7pc boost in morning trading to 36p.
Broker Liberum today tipped Speedy Hire as a buy. “Efforts to stabilise the business appear to continue to have the desired effect,” said Rahim Karim, a Liberum analyst.
“This earnings momentum combined with a continued deleveraging of the balance sheet should provide the market with greater confidence,” he said.