HSS Hire has announced it is undertaking a “detailed strategic review” after slumping to a £30.1m pre-tax loss in its H1 results.
The hire firm posted a £30.1m loss for the six months to 1 July 2017 on revenue of £160.5m. This compares with a £22.3m pre-tax loss and revenues of £166.2m in the same period a year earlier.
The group also confirmed it had closed 37 “underperforming” branches in Q1 and a further 13 by the end of Q2.
HSS reported exceptional costs of £13.2m, taking a £11.2m hit from branch closures, while it incurred a £2m loss from cost actions implemented in Q2 this year.
The group said that revenue growth in its third quarter to date had been “at a materially lower level of improvement than expected at the start of H2” and that it would be undertaking a “detailed strategic review”, with an update to be presented in November this year.
Chief executive Steve Ashmore, who joined the company in May this year from Wolseley UK, said the group would be undertaking the review to “gain profitable share in what remains an attractive and fragmented market”.
“While significant operational change was achieved during H1 17, both rental revenue growth and the cost base were temporarily impacted leading to reduced profitability,” he said.
“We are facing into these challenges by taking decisive action to reinvigorate rental revenue growth through the implementation of new sales initiatives and by rolling out cost actions that will deliver annualised cost savings of circa £13m, a number of which are enabled by the recent investment in our centralised engineering and distribution capability.
“As a result of these actions the group returned to profitability in June, with revenue in growth for the first eight weeks of Q3 17; this momentum will result in a stronger H2 relative to H1 performance, leading to a healthier exit rate as we head into 2018.”
The hire firm set up an efficiency plan in 2015, with a new national distribution centre established to improve product availability and productivity.
The original timetable was for all of HSS branches to benefit from the distribution centre by the end of the 2016.
However, this has since been extended in 2017, and HSS warned that this extended roll-out of operational changes would impact revenue growth and would reduce the speed of the group’s optimisation and cost reduction strategy.