Rental equipment provider Speedy Hire (SDY) says its recovery plan is helping to stabilise the business following earlier setbacks.
Speedy Hire says its full year pre-tax profit will beat expectations partially as a result of lower overhead costs including 100-plus job cuts.
Investment bank Liberum has upgraded its full-year pre-tax proft estimates by 12% to £11.3 million and maintains its ‘buy’ recommendation with a target price of 49p.
Revenue for the first half of its 2017 financial year is ahead of the prior year and exceeded expectations, says Speedy Hire.
Net debt will be significantly lower following the disposal of a large mechanical plant fleet, it adds.
Liberum says Speedy's earnings momentum and continued deleveraging of the balance sheet inspires confidence in the market concerning the management’s ability to improve return on capital employed.
Stockbroker N+1 Singer recognises Speedy’s positive revenue trend, but leaves its ‘hold’ recommendation unchanged until clarity is provided on the group’s medium-term strategy.
Speedy Hire has been under pressure by shareholder Toscafund to merge with rival HSS Hire (HSS).
Toscafund has a 19% stake in both companies and believes a tie-up is necessary due to unsatisfactory industry profitability. Speedy has consistently rejected calls to merge.
Following an improved performance in the first half of this year, executive chairman Jan Astrand told Toscafund that the takeover was not the right strategy.