Speedy Hire, the U.K.’s largest tool and equipment rental chain, last week posted an annual pre-tax loss of £70.6 million (about U.S. $114 million) for its fiscal year ended March 31, and said trading in the new financial year remained “challenging.” The loss compares with a profit of £30.5 million in the previous fiscal year.
The losses stemmed from £95.3 million in re-structuring charges from its closure of 82 branches and layoffs of 957 employees. The company said, however, that the action will save more than £42 million annually.
“The principal market in which Speedy operates — construction — has continued to polarize, with contractors increasingly reliant upon government and regulated spending while the private sector continues to withdraw from the market,” said Speedy chairman David Wallis. “This dynamic has had a further polarizing effect as fewer larger contracts are awarded to fewer larger contractors, and it is these larger construction and engineering groups that are continuing to secure an ever-increasing proportion of the workload available. Speedy is growing its revenues with such clients and thereby continues to increase market share; ableit in a smaller overall market.”
Wallis added that Speedy does not believe the market will show any meaningful signs of growth “for another 12 to 18 months.”
Operating profit dropped 22.3 percent year over year to £49.7 million, and the operating margin declined to 10.4 percent compared with 13.7 percent in the previous fiscal year.
Tool rental revenue was £237.2 million, compared with £256.6 million in fiscal 2008, while equipment rental revenue was £238.9 million, up from £208.9 million for the year-ago period.
In other Speedy news, the company plans to raise a net £100 million through a discounted rights issue to reduce its debt by about 40 percent and return shareholders to a majority stake in the business.