Tool and equipment firm Speedy Hire (SDY) has shrugged off the woes of the construction sector, reporting positive results underpinned by a strong infrastructure and public building sector.
The Merseyside firm said the start of its new financial year had been encouraging, clocking up a 36.4 per cent increase in first quarter revenue, with both its divisions continuing to perform well.
Tool hire revenue increased by 46 per cent over the same period last year and equipment hire revenue increased by 31.2 per cent, boosted by recent acquisitions.
Speedy Hire, which has five outlets in the West Midlands, bought Wolverhampton-based Carillion Asset Management’s accommodation business in a £12.5 million deal in May and Amec’s Logistics and Support Services for £12.5 million in January.
Excluding acquisition contributions, equipment hire revenue increased by 10.1 per cent, the firm said.
The company added it continued to operate “comfortably” within the headroom and covenants of its £325 million bank facility.
Speedy Hire chairman David Wallis said at the firm’s annual general meeting yesterday: “As reported recently in statements from major contractors such as Balfour Beatty, Carillion, Costain and Galliford Try, construction activity levels are being largely underpinned by infrastructure related spending in the public and regulated industry sectors.”
Spending in this sector helped Speedy achieve a 53.6 per cent increase in Q1 revenue from its top 50 contracting group customers compared to the same period previous year.
A continued move towards outsourcing and a greater focus by major customers on supply chain efficiency and quality also contributed to the jump in revenue, the firm said.
Speedy, whose direct exposure to the housebuilding market represents less than five per cent of its revenue, noted housebuilding, commercial office development and non-food retailing construction output was likely to remain weak for the foreseeable future.
It said the group had recently seen a deterioration in spending from smaller trade customers and others more reliant on consumer and certain retail-related construction output.
But public spending on schools, health, prisons and defence remained resilient, with many projects being funded through committed PPP or PFI schemes, the firm said.
It added regulated industries, such as water, electricity, gas, rail and airports, were also contributing a significant workload.
Private sector large infrastructure projects, such as the £250 million Hutchinson Ports development at Felixstowe Docks, remained positive as did food retailing, said Speedy.
“The bulk of our major national contracting customers, the group with whom we have seen our strongest revenue growth, thus continue to report encouraging activity levels and order books on the back of on-going projects and continuing high levels of investment,” said Mr Wallis.
“In addition, non-construction related activity with major industrial groups, such as those within the petrochemical, pharmaceutical, steel, nuclear and rail sectors, which represents approximately 30 per cent of turnover, also continues to provide growth opportunities.”
“The above position, together with the operational and financial flexibility the group enjoys, gives the board confidence in another year of further growth, providing there is no material change to our overall market view,” he said.