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Analysts double revenue forecasts at Speedy for 2018

City analysts have doubled their revenue expectations for Speedy after the hire firm posted a 7.5 per cent increase in revenue over six months to 31 August.

Speedy said revenue for the six months to 31 August was 7.5 per cent ahead of the same period in 2016 and that it had cut net debt to under £70m, compared with £85.4m a year earlier.

Pre-tax profit is also forecast to be “well ahead” of the prior year and “slightly ahead of the board’s previous expectations”, the group added.

The hire firm added it had made further cuts to its operating divisions and distribution centres, with the aim of saving £3m in overheads per year.

However, Speedy warned that these cuts would incur exceptional costs of £4.5m in the first six months of the year.

Analyst Liberum increased its 2018 revenue growth forecast for the firm to 5 per cent – up from its previous expectation of 2.5 per cent.

Liberum also upgraded its pre-tax profit estimate by 6 per cent, citing “a clear sense of the continued momentum being delivered by management”.

The analyst now expects the firm to post a pre-tax profit of £21.6m in its full-year results in 2018, up from its previous estimate of £20.3m.

In May, Speedy returned to profit for the first time since 2015 after posting a pre-tax profit of £14.4m for the year to 31 March 2017.

Revenue rose by 12.2 per cent to £369.4m, up from £329.1m the previous year, while net debt fell 30 per cent to £71.4m, down from £102.6m.

The results represented a significant turnaround for the group after it posted a pre-tax loss of £57.6m in its previous year’s results.

Speedy was forced to cut staff in both 2015 and 2016, with 295 redundancies announced in 2015 and a further 116 cut from the business in 2016.

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