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Trading statements

HSS Hire makes good progress on cost reductions

04 July 2017 07:32

HSS Hire Group reports good progress on cost reduction initiatives announced in May.

The group said underlying revenue in the second quarter was marginally ahead of the prior year with an improving rental revenue trend as the programme of sales initiatives which it began implementing in March gained traction with target customers, supported by the continued strength of the services business.

It said good progress had been made with the cost reduction initiatives announced in May, with the majority of these - c.£10m - implemented by the end of Q2.

A trading update said: "Accordingly we expect to be at the upper end of our previous guidance of annualised savings of between £11m to £13m below the Q1 FY17 cost run-rate.

"The Group's new operating model is delivering improved fleet availability across our network, driving greater capital efficiency, as expected.

"As a result we now expect that FY17 capital expenditure will be in the range of £36m - £38m, £4m - £6m lower than FY16. "EBITA growth and net debt reduction will be weighted towards H2 FY17 in line with usual trading seasonality and reflecting the growing momentum from our sales initiatives combined with the impact of our cost actions." Chairman Alan Peterson, said: "Our clear focus during Q2 has been on translating our market-leading fleet availability into sales growth within our Rental business.

"We are therefore pleased to see underlying core hire sales momentum building month by month across the quarter as initiatives targeting smaller and medium sized customers have begun to have an impact.

"In parallel, the operating model is also delivering the planned benefits of greater capital efficiency, which is reducing our investment requirement, and higher cost savings through operational efficiency.

"We are encouraged by these initial signs that our operating model is delivering the benefits we expected." Chief executive Steve Ashmore added: "Having only joined the Group towards the end of the quarter, I have spent the last few weeks familiarising myself with its operations and meeting the team.

"While this process is ongoing, it is already clear to me that we have a fundamentally strong business with the building blocks in place to deliver improved customer experience and shareholder returns.

"I look forward to updating shareholders further at the interim results in August."

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