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CN Briefing: Plant hire; acquisitions; profit warnings

“It takes a long time for a plant hire company to die.”

So said the chief executive of a major plant hire organisation at an off-the-record forum chaired by CN during the depths of the last recession.

He was of course referring to the resilient business models that these firms generally exhibit. But time is the great leveller.

So where do they go when the writing’s finally on the wall? Into the arms of other plant companies, if Ashtead Plant Hire Company’s acquisition of three Hewden Group divisions this week is anything to go by.

The £29m A-Plant acquisition comes on the back of news that the venerable Hewden Group had gone into administration, with more than 250 job losses.

Hewden had been desperately trying to refinance £190m of borrowings that were due to expire in the coming months.

Maybe the question should have been, ‘Why is the plant hire sector seeing so much pain this week?’ Because make no mistake: it’s had a bad few days.

News that HSS has extended the roll-out of its national distribution centre ‘efficiency plan’ into the first quarter of 2017 was no bright spot either.

The firm warned that this extension to the roll-out of operational changes would impact revenue growth and reduce the speed of the group’s optimisation and cost reduction strategy.

Summarised, further costs on top of delays mean it’s issued a profit warning.

Put another way by Julie Palmer, partner at financial services and restructuring firm Begbies Traynor, HSS investors “should prepare themselves for more turbulence in 2017”.

And further waves came with the announcement that Laing O’Rourke has sold its mobile crane fleet to hire specialist Ainscough. This will see around 11 mobile cranes transferring over from Laing O’Rourke’s Select Plant arm, along with a number of staff.

Not news in the same bracket as that of Hewden or even HSS perhaps, but a sign that the best-laid plans are prone to change in a recently mercurial sector.

One thing’s for certain though: the plant hire market has a lot to say about the wider industry’s direction of travel, health and ill-health.

Without reading too much into the runes, the wise observer would do well to watch carefully for further developments in this sector.

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