Cost inflation and weak demand hurts Speedy Hire as construction sector struggles continue

UK tool and machinery specialist Speedy Hire said its 2023 results would be lower than initial expectations as softer demand and warmer-than-expected weather hit.

In a trading update issued to the London Stock Exchange today, the group said total group revenue for the 2023 trading year was £420m, down around five per cent from the previous year.

Alongside the fuel and weather contingencies, the company said its regional base underperformed by around six per cent year-on-year, hit by cost inflation and softer demand across the construction sector.

The group said it has secured additional annual turnover in excess of £40m across multi-year contracts with new and existing customers, which should “give confidence for growth” from next year and beyond.

However, Speedy Hire added that it probably wouldn’t see any material benefit from the contracts during 2024.

The Newton-le-Willows-headquartered company expects to announce its final results for the financial year ended 31 March 2024 in mid-June. 

In January, Speedy Hire issued a profit warning, despite it performing “resiliently in the face of cost inflation and macroeconomic uncertainty”.

One month later, Edinburgh-based Aberforth Partners took advantage of the share price slump as a result of the profit warning and increased its holding in the company from 5.95 per cent to 10.31 per cent.

Speedy Hire continues to service a construction industry that is clinging to hopes of lower interest rates in the not-too-distant future.

And despite the lukewarm appetite for its service last year, the industry looks to be picking up momentum on the back of an improving housing market.

Last month, S&P’s purchasing managers’ index (PMI) for the construction sector showed a rise to 49.7, up from 48.8 and only marginally below the 50 no-change mark, its highest level since August last year.