Hire group Speedy has warned that profits will be below expectations as the construction market it serves remains challenging and it faces contract delays.
The Haydock group today (Tuesday, January 30) said it had continued to perform “resiliently” amidst inflation and ongoing economic uncertainty. But shares fell as much as 17% this morning after its update warned on profits.
But it said revenues from its national customers in the construction sector were up just 3% year-on-year at the end of the third quarter, when they were up 5% at the end of the second half. Revenues from regional construction companies were down 6%, matching H1 performance.
The group said warmer weather had also hit its revenues as sales of seasonal products were down.
Speedy said it was was seeing revenue growth from new and existing national customers and secured more than £40m in annualised revenues from multi-year contracts in the third quarter.
It said: “These contracts represent attractive growth opportunities but have taken longer to mobilise, due to contract specific delays. Therefore, new contract revenues will have only marginal benefit in FY24 with the full effect coming in FY25.
“We are pleased by these contract wins and have a strong pipeline of opportunities. This new business has been secured with good pricing discipline and demonstrates the attractiveness of Speedy's customer offering.”
Speedy said its Velocity growth strategy, launched last year, was starting to prove successful with supply chain benefits set to “deliver benefits into future years”. It said Green Power Hire was also performing in line with expectations, and hailed a digital agreement with B&Q where Speedy services are now available for digital hire in-store within every B&Q and Tradepoint as well as on the companies’ websites.
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Following the GPH deal net debt rose to £117.3m at the end of the year, which the group said marked “the normal seasonal high point”.
The group said: “We continue to make good progress with the implementation of our Velocity strategy, which will deliver benefits and opportunity for Speedy for the long term. Nevertheless, with weakness in some of our end markets and seasonal product lines, and some delays in mobilisation of significant contract wins, the Board expects the full year profits to be below its previous expectations.”