Speedy Hire Reports Profit Decline Amid Challenging Market Conditions
Why we think this is bad
The equipment rental company's financial performance has deteriorated significantly, with adjusted profit before tax falling to £8.7m from £14.7m last year. More concerning is the shift from a £5.1m profit to a £1.5m loss before tax. While revenue only declined slightly by 1.2%, the substantial drop in profitability indicates serious margin pressure. The increase in net debt to £113.1m and the dramatic reduction in free cash flow from £23.5m to just £0.8m are red flags for the company's financial health. Despite these challenges, the maintained dividend offers a glimmer of positivity, but it may not be sustainable if profitability doesn't improve. The company's outlook acknowledges ongoing macro-economic challenges and delays in government spending, which could continue to impact performance in the near term. While new financing facilities provide some breathing room, they don't address the underlying profitability issues. The market is likely to view these results negatively, given the clear deterioration in key financial metrics.
Key Points
- Revenue down 1.2% to £416.6m
- Loss before tax of £1.5m, compared to £5.1m profit last year
- Adjusted profit before tax decreased to £8.7m from £14.7m
- Free cash flow fell sharply to £0.8m from £23.5m
- Net debt increased to £113.1m from £101.3m
- Dividend maintained at 2.60 pence per share
- New £225m financing facilities secured post year-end
- Challenging market conditions and delays in government spending noted
- Company "well positioned to capitalise on end market recovery"
Summary
Speedy Hire plc, the UK's leading tools and equipment rental company, has reported challenging full-year results for FY2025. Revenue decreased slightly by 1.2% to £416.6m, but more concerning is the sharp decline in profitability. The company swung to a loss before tax of £1.5m, compared to a profit of £5.1m in the previous year. Adjusted profit before tax fell to £8.7m from £14.7m. Free cash flow saw a dramatic decrease to £0.8m from £23.5m, while net debt increased to £113.1m. Despite these challenges, the company maintained its dividend at 2.60 pence per share. Management cited macro-economic challenges and delays in government spending as key factors impacting performance. On a positive note, Speedy Hire secured new financing facilities of £225m after the year-end, providing additional financial flexibility. The outlook remains cautious, with the company stating it is "well positioned to capitalise on end market recovery", implying current market conditions remain tough.