HSS Hire shares hammered after warning on sales and profits
Troubled tool rental group HSS Hire has seen its shares hammered after warning over sales and profits as turnaround efforts take longer than expected.
Shares tumbled by as much as a quarter before settling around 14% lower as it said revenue growth had been "materially" lower than expected and alerted over profits for the second half.
The warning came as it reported mounting pre-tax losses for the first half, at £30.1 million for the six months to July 1 against £7.8 million a year earlier.
On an adjusted earnings basis, it swung to a £7.3 million loss against profits of £9.4 million a year ago.
It said while its recovery plan had helped return the group to profit in June and driven revenue growth in its beleaguered rental division, progress has been slower than targeted.
Chief executive Steve Ashmore said: " Whilst the rate of recovery in our rental revenues has been positive, it has been materially slower than originally targeted, leading to lower-than-expected profitability over this period."
HSS is pencilling in adjusted earnings of £8 million to £11 million for the second half, leading analysts to slash their full-year expectations.
But Mr Ashmore insisted the group was taking "decisive action" and said its target market remained "attractive and fragmented".
HSS has been slashing costs and axing branches to save around £13 million a year, while it has also been leading a transformation programme to integrate a new national distribution and engineering centre.
It shut 50 branches during the first half, bringing the total closed to 68 over the past year.
Mr Ashmore said the management team is continuing to review the firm's strategy in a bid to return it to health.
He said the group will see a stronger second half, "leading to a healthier exit rate as we head into 2018".
But the expectations for the second half mean HSS is on track for lower-than-forecast full-year underlying earnings of between £700,000 and £3.7 million.
HSS has made a string of profit warnings and embarked on a management overhaul since floating on the London Stock Exchange in 2015.
Mr Ashmore, the former director of industrial maintenance company Brammer, took the reins at HSS on June 1.
He replaced John Gill, who quit in May after eight years with the firm.
Neil Wilson, senior market analyst at ETX Capital, said: "HSS has been hit by Brexit with mid-sized and smaller customers hiring fewer tools as confidence has been sapped.
"Investors will be used to this kind of warning. Steve Ashmore, the second new CEO in as many years, is trying to turn things around but the conditions are challenging and investors are losing patience."