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Shares in British equipment rental firm Speedy Hire experienced a dramatic 30 per cent decline on Monday following a sobering profit warning that rattled investor confidence. The tools and equipment specialist revealed that despite achieving 5 per cent year-on-year growth in December, current market conditions have significantly dampened performance.
The Warrington-based company cited the broader economic downturn, reduced railway infrastructure spending, and complications with its Kazakhstan joint venture as primary factors behind the profit warning. By market close, shares had tumbled 7¾p to settle at 19¾p, marking a 28.3 per cent decrease.
The company’s net debt projection has risen to approximately £123 million for end-January, representing a 9 per cent increase year-on-year. This surge in debt levels, coupled with heightened interest charges, is expected to place additional pressure on profit margins.
Despite these challenges, the organisation maintains an optimistic outlook regarding its third-quarter performance, highlighting strong activity in civil engineering and commercial projects throughout 2024. The company’s recent plant hire contract with infrastructure specialist Amey is reportedly progressing well, offering a glimmer of hope for future growth.
City analysts remain cautiously optimistic about Speedy Hire’s prospects. Peel Hunt maintains its ‘buy’ rating, emphasising the company’s strategic positioning to capitalise on an anticipated construction sector recovery. Similarly, Panmure Liberum highlights potential opportunities in government-backed green energy initiatives.
The equipment rental sector has faced significant headwinds post-Covid, with Speedy Hire’s share price declining more than 70 per cent over the past five years. The company’s immediate focus remains on cost management and strategic investment decisions to navigate the challenging economic landscape.
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