The Group's interims report poor H1 17 results after "substantial operating model change".
Companies: HSS Hire Group PLC
HSS Hire have released their interim results for the first half of 2017, reporting profit and revenue falls that have led to shares diving almost 20% in early morning trading today.
The Group reported a fall in revenue, down 3% to £161m compared to the same period last year. Adjusted EBITDA has nearly halved, down 47% to £17m, and adjusted profit before tax swung from a £2.2m profit in H1 2016 to a £14m loss in H1 2017. Finally, there is no interim dividend this year, versus a 57p distribution last year.
Substantial changes in the Company's operating model are the cause of the fall in profit which was expected to be the case, according to Management.
The report also gave an update on the first half of H2 17, saying HSS experienced:
"Year on year revenue growth on both underlying and reported basis for the first 8 weeks of Q3 17, however at a materially lower level of improvement than expected at the start of H2. We now expect H2 Adjusted EBITA profit to be in the range of £8m to £11m."
Management hopes to save c. £13m in costs with a number of initiatives including the Group's recent investment in a "centralised engineering and distribution capability."
Today's bad news is salt in the wound for HSS after already experiencing a poor couple of years - shares today are worth less than 25% of their May 2015 price of 215p. The uncertainties surrounding Brexit, a challenging macroeconomic environment, increasing regulation and competitor challenges, including those from rival Speedy Hire, are just some of the issues exacerbating HSS's woes.
The Group saw revenue in the five years to 2016 almost double from £177m to £342m, yet profit margins have suffered - it reported a net loss of £17m in 2016. With a market cap of £95m, HSS currently trades at a PE ratio of 17x versus the industry median of 14x.