HSS Hire narrows losses amid cost cuts, revenue growth

4th Apr 2019 08:02

(Sharecast News) - Tools and equipment hire company HSS Hire reported a narrowing of its full-year pre-tax losses on Thursday amid cost cuts and revenue growth.In the year to 29 December 2018, pre-tax losses narrowed to £4.5m from £85.2m the year before on revenue of £352.5m, up 5%. Adjusted total earnings before interest, tax depreciation and amortisation rose by 45.8% to £71.3m and adjusted EBITA was up £25.6m at £27.4m.Rental revenues from continuing operations were up 3.8% year-on-year to £226m, accounting for 70% of revenue from continuing operations. Meanwhile, services revenue was 12.2% higher at £96.8m, accounting for 30%.Material cost savings were delivered during the year, with overheads reduced by £20m and the group said cost initiatives improved margins by 5.6 percentage points to 20.2%.Meanwhile, trading for the 13 weeks to 30 March has been in line with management expectations, HSS said.Chief executive officer Steve Ashmore said the business made "significant" progress against its strategic priorities and delivered the highest adjusted total EBITDA in its history."Over the year we made a series of important strategic and operational changes including the seamless transition to a new distribution model which significantly reduces costs, the successful refinancing of the group giving us long-term stability, and the sale of UK Platforms, allowing us to focus on the Tool Hire business and further reduce debt."Alongside these changes we have maintained trading momentum with good underlying revenue growth. Our increased focus on improving profitability has also proved successful with margins enhanced across both our rental and services segments combined with a material reduction in our cost base."Ashmore said that while the broader economic outlook remains uncertain, HSS's leaner operating model, "excellent" market positions and clear strategy leave it well placed to continue to grow market share in any market.HSS said that after "careful consideration" of its performance over the year, it is in the best interests of shareholders not to pay a final dividend. This will be re-evaluated once the net debt leverage ratio falls below 2.5x.At 1050 BST, the shares were up 2.5% at 35.96p.