Tool and equipment hire firm HSS Hire said on Thursday that it swung to a full-year loss, with revenue down as the company works to turn itself around.
In the year to 30 December 2017, the group swung to an adjusted pre-tax loss of £12m versus a profit of £5.8m the year before as revenue dropped 1.9% to £335.8m. The reported pre-tax loss widened to £85.2m from £17.4m in 2016.
Adjusted earnings before interest, tax, depreciation and amortisation declined to £48.9m from £68.6m the year before and HSS posted an adjusted loss per share of 5.68p versus earnings per share of 2.94p the year before.
The company said it incurred exceptional costs of £66.6m primarily to realise savings implemented in the year and to enable changes to the supply chain model identified in the strategic review.
During the year, HSS achieved annualised savings of £13m through working with its suppliers to reduce costs, reducing its central headcount and closing 55 branches.
Chief executive officer Steve Ashmore said: "Overall 2017 was a difficult year for HSS, mainly due to the impact of operational changes made in 2016. We have addressed this by focusing on the core rental business and reducing our cost base and I am pleased with how the business responded in the second half of the year. When I arrived in June, I instigated a thorough strategic review process, the results of which have given us clear direction and an ambition to restore the business to historic levels of performance.
"Whilst we are only a few months into implementing the strategy, early signs are encouraging, and we are pleased with the results of the changes made to our network and the associated cost savings. I have been particularly pleased with how the organisation has embraced and responded to the new strategic direction, and remain confident that we will be successful in delivering on our strategic priorities set out in December."
Ashmore said the positive trading momentum has continued into the first quarter, with a "strong" start to 2018 and good progress on the group's strategic priorities.
Numis pointed out that the results were in line with management's previously indicated guidance and said the performance reflects a period of great challenge, but also significant progress, with a return to underlying core rental growth and a lower cost base providing momentum to the business into 2018.
"We reinstate our recommendation on HSS with a hold rating and price target of 30p. While we believe management has made significant progress on the turnaround of the business, and look for this to be sustained, we believe that material debt reduction is the key to realising greater value in the equity base over the long term."
At 1130 BST, the shares
were up 6.9% to 31p.