Speedy return to growth despite an industry slowdown

Speedy Hire yesterday said its tools and building equipment hire business returned to sales growth in the final quarter of 2010 despite the contraction in the construction industry.

The firm, which operates from 325 sites, reported an 8.8 per cent increase in revenues excluding equipment sales compared to the same period the previous year, while equipment sales increased 23 per cent.

Output in the snow-hit construction industry fell 3.3 per cent in the quarter but Speedy achieved growth by focusing on resilient sectors, such as water, waste, energy and transport.

Although sales growth slowed to 2.1 per cent in January, it said it could return to profit at an underlying level in its second half, providing it continues to trade well in the next few weeks. It made a 4.6 million underlying loss in the first half of its financial year to the end of September. The firm stressed that its focus on growth markets and previous efforts to restructure the business left it well placed to benefit from any recovery in the market.

Wayne Gerry, an analyst at Investec Securities, described the update as "mixed but encouraging".

He added: "Although Speedy has still to trade through two important months, a third consecutive quarter of rate improvement bodes well for the UK business."

However, he downgraded his profits forecast to take account of losses from earlier in the year when two of Speedy's customers - social housing group Connaught and building firm Rok - went into administration, wiping a combined total of 1.9m from its revenues. Its international arm is also growing less quickly than expected, he added.