HSS Hire paints confident outlook despite big drop in 2023 profits

1st May 2024 07:12

(Sharecast News) - Equipment rental firm HSS Hire said it expects results for the current year to be in line with market forecasts despite an uncertain macro environment, after it reported a sharp drop in annual profits for 2023 and the resignation of its chief financial officer.

HSS, which offers tool and equipment hire predominantly to business customers across the UK and Ireland, said pre-tax profit fell to £11.8m in the 52 weeks to 30 December, down from £18.9m the year before, resulting in earnings per share slumping to just 0.6p from 2.9p.

Nevertheless, the company said this was still the second-highest pre-tax profit level in the group's listed history, as it invested £5.1m in operating expenditure and £1.3m in non-recurring technology capex - "both to drive future growth through new routes to market". Cost of sales, distribution costs and admin expenses were all also higher than 2022.

HSS said it achieved a "solid trading performance" in 2023, with revenues rising 5% to £349.1m, outperforming the wider market despite some demand softness across certain customer segments and for seasonal products. Services revenues were up 12% at £141.8m, while rental revenues rose just 0.5% to £207.3m.

The company recommended a final dividend of 0.38p per share, taking the total payout for the year to 0.56p, up 4% on the prior year.

"I am pleased to report another year of significant strategic progress alongside resilient financial performance, delivering revenue growth ahead of the market despite a more challenging macro-environment," said chief executive Steve Ashmore.

"We are more confident than ever in our strategy and the strength of our technology platforms. We are well placed to take full advantage when the market recovers."

The company said it remains confident that full-year EBITA will be in line with market expectations.

In a separate statement, HSS said that CFO Paul Quested is to leave the board in September to "dedicate time to his family for the foreseeable future", with the search to find his successor now underway.

"Since joining in 2016, Paul has worked tirelessly to improve the business and has played a major part in HSS' transformational journey and commercial success," the company said.

The stock was up just 0.2% at 2,211p by 0934 BST.