Rental small-cap grew overall revenues 9.6% but saw pre-tax losses increase to £17m
Companies: HSS Hire Group PLC
HSS Hire's losses grew in 2016 as challenges in its rental business outweighed strong performance in its specialist rental and services business, dampening overall revenue growth.
In its audited results, the rental small-cap said overall revenue grew 9.6%, driven by 60% growth in services and decent growth in revenue in its specialist rental business. The Irish business also continued to grow its market share.
Whilst adj EBITA, the company's favoured measure of profit, was stable at £20.5m (+1% YoY), rental revenue and profitability was hit by operating model changes throughout the fourth quarter, resulting in a reported pre-tax loss of £17.4m.
HSS said the results were due to its investment in a new distribution network structure, "including non-finance exceptional costs of £17m”, stressing that market share grew in both the UK and the Republic of Ireland. It added that changes were laying the foundations for future profit growth.
Despite the losses, consensus forecasts are expecting the firm to return to profitability in 2017, with profits doubling to £14m in 2018.
CEO John Gill said it was a significant year of change for the Group, adding that he believed the changes will enable the company to deliver better fleet availability to customers.
"While we made good progress in key accounts, specialist rental and our fast-growing Services business during the year, this was not matched by revenue growth in our core Rental business and re-establishing momentum in this area is our primary focus in 2017 and beyond."
He added that with the new platform in place, the firm is able to drive growth in Rental revenues, particularly in our smaller and medium sized accounts.
Shares in HSS Hire fell nearly 7% on Wednesday.