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City News: Sharp share falls Catherine Stratton assesses how leading hirers are faring during the current Stock Market uncertainty. SHARE PRICE PERFORMANCE (23 July 2008) Tradition has it that the Stock Market runs a year ahead of the real economy, and if it is right, we look set for a grim 2009. However, markets also tend to exaggerate, because of the herd instinct, so maybe the gloom is somewhat overdone. The IMF still forecasts growth for the UK economy: 1.8% this year and 1.9% next; lower than government forecasts of 2% and 2.5% respectively, but it still does not indicate a recession. Nevertheless, with the outstanding exception of Aggreko, the London Stock Market obviously thinks our hire companies are in poor shape, despite the continuance of positive news, such as the results covered on these pages recently. Mid-July saw the share prices of Speedy, Vp and Andrews Sykes all reaching new ‘lows’. They have all since recovered somewhat, but it would be a brave soul who dared to say they should not be hit again. Speedy had the misfortune to see its shares hit a new low on the day of its AGM. Only a week or so earlier, it had announced that executive directors and senior management had elected to invest over £2m of their annual bonuses in company shares. In an interim management statement, issued in conjunction with the AGM, Chairman David Wallis described the start to the new financial year as “encouraging”, with both Speedy divisions achieving strong growth. Overall revenues in the first quarter (April–June) were up 36.4%; Tool Hire rose 46% (helped by the Hewden Tools acquisition) and Equipment Hire grew by 31.2%, including contributions from AMEC LSS (acquired in February) and Carillion Asset Management portable accommodation (acquired in May). Excluding the acquisitions, Equipment Hire revenues were up 10.1%. Because of the integration of Hewden Tools, the company is unable to provide like for like comparatives for the Tool Hire division. The statement said the company had enjoyed a 53.6% increase in first quarter revenues from its top 50 contracting group customers compared with the same quarter of 2007, which had not included any contribution from Hewden Tools. According to the company, other factors contributing to this improvement included “a continued move towards outsourcing and greater focus by major customers on supply chain efficiency and quality”. David Wallis said most of the company’s national contracting customers were still reporting “encouraging activity levels and order books”, and that “non-construction related activity with major industrial groups, such as those within the petrochemical, pharmaceutical, steel, nuclear and rail sectors, which represents approximately 30% of turnover, also continues to provide growth opportunities.” OTHER NEWS IN BRIEF Vp continues to exhibit confidence with another acquisition. It has paid £0.9m for the tools and telehandler fleet of UCS Plant, part of the Rand Group. Vp has also entered into a three-year sole supply agreement with Rand’s subsidiaries UCS Civils and Linpave Building to hire a range of tools and specialist equipment. Vp Chairman Jeremy Pilkington described the deal as “an important further development for the Group”. Hewden Although it had been rumoured earlier in the year, the news of Brian Sherlock’s departure from Hewden was a surprise. He was appointed Managing Director of Hewden Hire Centres in 2002, becoming Operations Director of the group in 2005 and, subsequently, Managing Director. He oversaw the integration of the Plant and Tools operations and then the eventual sale of the Tool Hire operation last year. Finning UK Finance Director, Doug Sprout, whose career with Finning began in Canada in the 1980s, has been appointed as the new Managing Director. • Executive Hire News › Archives › August 2008 › City News › Sharp share falls
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