Speedy Hire had a strong end to 2010, with sales increasing 8.8% on 2009
The plant hire firm also had a solid start to 2011, despite the continuation of the poor weather seen towards the end of 2010.
Its sales during January were up 2.1%.
An update to the stock exchange today said: “Despite the harsh weather conditions in December and the Office of National Statistics’ estimate of a 3.3% fall in UK construction sector output in the quarter ending December 2010, Group revenues (excluding fleet equipment sales) in the three months to 31 December 2010 improved by 8.8% on the prior year period.
Speedy Hire’s Weekly Share Price
“January trading was also encouraging, with Group revenues (excluding fleet equipment sales) up 2.1% compared to January 2010.”
The firm strips out equipment sales when working out its sales performance as these can be very volatile and lead to big peaks and troughs depending upon the market for second hand equipment at the time.
As is usual in the UK, the volume of equipment on hire in the last three months of the year was down by 6.2%, compared with the period between 1 July and 30 September but higher charge out rates have helped to increase sales during this period.
This is a positive sign that some inflation has returned to the sector.
As its fleet ages, it needs replacing and the statement said the potential cost of replacing its fleet could be up to £120m.
“Based on the current age profile of the Group’s hire fleet, it is estimated that the replacement cost of fleet reaching their UEL’s (useful economic lives) over the next three years is approximately £120m, equivalent to approximately 51% of the current net book value of the hire fleet,” the firm said.
The group has been spending around £43m each year on the renewal of its fleet, so the annual spend is likely to me maintained around its current level.
There is still no strong recovery in the sector, however, and Speedy will remain cautious in the future.
It said: “The Board continues to take a cautious view about short term recovery prospects in the UK and therefore will maintain its concentration on cash, margins and capex, all of which have demonstrated further progress during the period.
“However, with its strong balance sheet, improving trading performance, market leading position and ever closer alignment to growth markets, the Board considers that Speedy is well placed to benefit from the market recovery when it comes.”