Shares in plant hire specialist Speedy Hire plunged 12% this morning as the company indicated turnover would be down by close to 30% compared to last year.
The company said turnover was 29% down on last year during the first half of 2009 and that turnover for July-September was maintaining that trend.
The trading statement, issued this morning, read: “Whilst the trading environment within the construction sector remains challenging and confidence is fragile, the stability which we had suggested was becoming more evident in the early part of this financial year has carried through into September, albeit off a very low base.
“However, with the continued weakness of the private sector and cancellation of projects planned, e.g. Kingsnorth Power Station, there is little evidence that the seasonal pick-up in turnover typically associated with the late September/October period will follow traditional patterns.”
The group remains heavily dependant on the major contractors, with the top 50 contractors contributing 26% of its turnover compared to 21.5% a year ago.
However, it said that efficiency savings from restructuring would begin to reap benefits by the year end. Savings made include making some 270 redundant – 6% of workforce. “These measures are targeted to deliver a further £30M of savings in the current financial year, with approximately £5M benefiting the first half and £25M the second half.”
“Second quarter trading and the benefits of these further actions to realign costs will offset the small first quarter EBITA (pre-exceptional) loss.”
“Having anticipated the severity of the downturn earlier and more aggressively than its peers, management has now removed in excess of £70M of costs since August 2008,” it said.
The company has also reduced its net debt to some £135M at the end of September, compared to £248M at the start of the financial year, and reducing to around £120M by the end of the year.
“Any further deterioration in the Group’s revenue forecasts is unlikely to be offset significantly by additional cost reductions,” read the statement.
The city reacted badly to the news, with shares in Speedy Hire falling more than 12% in early trading.