A strong British economy coupled with weak demand for vans, equipment and tools makes for an odd contrast.
But that is the reality according to stock market announcements this week.
Tool hire shop Speedy Hire (SDY) today joined rival HSS Hire (HSS) and van rental specialist Northgate (NTG) in marking down profit expectations. Speedy’s chief executive officer (CEO) Mark Rogerson was forced to step down and shares plummeted 33% to 48p.
Performance at equipment hire firms has historically been a bellwether of the UK economy and the latest signs aren’t good.
That’s at odds with forecasts of 2.4% growth in the UK economy this year, according to Berenberg economists.
Problems at Speedy and HSS are most likely down to a general election-related slowdown, according to Berenberg analyst Josh Puddle, rather than general economic weakness.
‘Our economists’ view is that the UK economy is strong, growth is expected at 2.4% this year and the pound has also been strong,’ he says.
‘With a Conservative-led government, that should be good for the outlook and particularly for the equipment rental firms in terms of investment in the UK economy and construction.’
A slowdown around the time of the election campaign, which ran through April and early May, may mean second quarter results announcements will be disappointing, Puddle believes, though it is likely a short-term phenomenon.
After Speedy's announcement, shares in HSS are down a further 6% after shedding more than 25% yesterday and other industry players VP (VP.) and Lavendon (LVD) are down 1% and 3% respectively.
Ashtead (AHT), which has the majority of its operations in the US, is up 2.2%.