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Losses widen at HSS

26 Aug 15 Losses at newly public HSS Hire Group widened in the first half of 2015 although the directors say they are succeeding in growing market share.

Chief executive Chris Davies
Chief executive Chris Davies

HSS Hire Group, which floated on the London Stock Exchange earlier this year, made an operating loss of £1.5m in the six months to the end of June 2015. For the same period last year it made an operating profit of £8.4m. The loss before tax was £14.1m (2014 H1: £11.1m loss).

Group revenue was up 12% to £146.4m (H1 14: £130.6m), with organic growth of 10.6% (excluding the impact of acquisitions).

Hire fleet utilisation over the 12 months to June 2015 averaged 48% for the core fleet and 73% for specialist equipment, up from 46% and 69% respectively the previous year.

The operating loss reflects £3.0m exceptional expenses relating to February’s initial public offering and increased depreciation charges due to investment in the hire fleet, directors said.   

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HSS is opening 50 new stores this year and next year will open a new national distribution centre to target online business. The existing hub and spoke distribution network will focus on customer delivery and collection.

Chief executive Chris Davies said: "Our results for the first half of 2015 are in line with our update at the end of June, with revenue growth of 12% and further gains in market share.  However, as others have reported, trading continues to be unpredictable, and after a reasonable July, we have seen softer market conditions in August. This is obviously disappointing. As a result we are cautious on the outlook for the balance of the year and now expect full year earnings to be below current market expectations.

"Notwithstanding this, we are confident that our strategy is continuing to underpin our market share progress. We are seeing strong growth in the specialist businesses as a result of our investment. We are building our key accounts pipeline and our roll-out of local branches is progressing to plan with 50 openings this year.

"We are making good progress in our plans to open a new national distribution centre in H1 2016, which will further increase availability for customers. This will also enable us to fully exploit our market-leading online proposition. Furthermore, this development will allow our existing hub and spoke network to concentrate exclusively on customer deliveries and collections, enhancing service levels. It will also contribute to the rebasing of costs in the range of £8m and £12m in 2016 with between £1.5m and £3m being delivered in Q4 2015. Despite the softer August we remain confident in the medium and long term growth prospects for the business."

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