HSS Hire deepens losses amid higher costs and weaker demand
Embattled tool rental firm HSS Hire has deepened its losses as it came under fire from weaker demand and higher costs.
The company said a slide in uptake from bigger customers took its toll on the business, widening pre-tax losses by £5.3 million to £13.8 million for the year to December 26 2015.
Share plunged more than 6% after the firm said tough trading in the construction industry, lower prices from its rivals and rising depreciation costs dealt a blow to its performance.
But it said full-year revenues had outperformed the rest of the market, climbing 10% to £312 million in a sign that its cost-cutting strategy was working.
The update comes after a volatile year for the business in which it faced a string of profit warnings and a management shake-up.
Chief executive John Gill said it could expect a better financial performance this year as its efficiency drive bears fruit.
He said: "Profitability was lower than planned at the outset of the year. Following a slower than expected first half the board and I reviewed our strategic objectives and concluded that, with some modifications, they continue to be the right ones to generate shareholder return through market share growth and operational and capital efficiency."
He added: "Together with the cost reduction programme, we expect these actions to improve our cash generation and financial performance."
The firm said it had opened 50 new low cost branches in 2015 and was on course to launch a further 20 sites this year.
It said distribution costs had grown by 11% to £41.3 million, while administrative expenses rose by more than 18% to £144.2 million.
But it said it had managed to secure £2.4 million of gross cost savings last year and was targeting £10 million of savings in 2016.
HSS, which has 300 branches across the UK employing more than 2,900 people, floated on the London Stock Exchange in February last year.