September 19, 2017 / 7:40 AM / a year ago

UPDATE 1-Speedy Hire expects to beat full-year expectations

(Adds details, share movement, analyst comments)

Sept 19 (Reuters) - Industrial equipment rental company Speedy Hire said it expects full-year adjusted pretax profit to be well ahead of the prior year and slightly ahead of its expectations.

Analysts expect adjusted pretax profit of 20.52 million pounds for the year to March 31, according to Thomson Reuters I/B/E/S, up from 16.2 million in 2016.

Speedy Hire’s stock was up 4.9 percent at 53.75 pence at 0711 GMT, making it the biggest gainer on the FTSE All Share Support Services Index.

The company, which works with customers in the construction, infrastructure and industrial markets, also said it had reduced the number of its operating divisions and distribution centres, as part of an ongoing attempt to cut costs.

The reduction will result in annual overhead savings of at least 3 million pounds ($4.06 million), Speedy Hire said, adding that it sees net exceptional costs of about 4.5 million pounds in the first half year.

Revenue for the five months to Aug. 31 was up about 7.5 percent led by growth in services, it said.

Greg Poulton, analyst at N+1 Singer, called the trading update slightly ahead of expectations driven by further cost savings, adding that he expects to upgrade his current year pretax profit forecast by around 5 percent to 21.6 million pounds.

“With further opportunities for market share gains as the turnaround continues at Speedy Hire, we see potential for further upgrades as the year progresses,” Poulton said.

The company said its net debt at the end of the half year to Sept 30 was expected to be below 70 million pounds, down from 85.4 million pounds a year earlier.

“As well as confirming that the strong revenue momentum established in 2H17 has continued into FY18, the company also continues to outperform in relation to operating costs and working capital management,” Liberum analyst Rahim Karim, who rates Speedy Hire as “buy”, said.

$1 = 0.7386 pounds Reporting by Noor Zainab Hussain in Bengaluru; editing by Jason Neely

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