Speedy Hire profits jacked up as small business strategy pays off
A slow uptake of its newly launched app was a rare downside over the past year for tools rental business Speedy Hire as profits shot up.
The figures
Revenue ticked up nicely by 5.8 per cent to £394.7m as the company spent around £31m on two acquisitions, bringing in expertise in training and powered access.
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Profit before tax was up 51 per cent to £27.2m, and rose 19 per cent on an adjusted basis to £30.9m.
Return on capital employed, a key measure for the business, was up by 1.3 percentage points to 12.8 per cent, the company revealed this morning.
Net debt rose to £89.4m from £69.4m, while leverage was up slightly to 1.1x after the acquisition spending and nearly £22m of investment.
Why it’s interesting
After taking a £8m revenue hit from the collapse of Carillion early last year, Speedy Hire vowed to shift its focus to reduce exposure to large players.
A dedicated telemarketing team which has made more than 30,000 calls to small and medium (SME) sized customers each month has helped forward this new strategy, increasing SME revenues by around a quarter.
A new promise of same-day delivery on anything ordered before 3pm – and four-hour delivery on orders within the M25 – has also helped drive up SME engagement as small businesses are more likely to need quick delivery.
But a push to get customers to use the new Speedy Hire app has been relatively slow, the company admitted today, while announcing e-commerce expert Rhian Bartlett would join the board.
What Speedy Hire said
Chief executive Russell Down told City PM that the app take-up had taken “longer than I would want” in what was otherwise a strong year for his company. “There is a lot of effort going in to increase that,” he added.
Read more: Carillion anniversary: A year of turmoil for outsourcers
“[Bartlett’s] experience in that field will be invaluable to us in working through the customer journey and improving the take-up of the app,” he said.
“The results are really strong,” Down said. “We’ve got a strong platform for the future with a good balance sheet, are well invested in digital and there are projects out there to carry us forward into the coming year.”