UK tool and equipment rental company Speedy Hire PLC (LON:SDY) raised its full year profit forecasts on Monday, sending its shares up more than 5% in early deals.
In a trading update, Speedy Hire said: “As a result of the group's renewed focus on both SME (small and medium enterprise) customers and services revenues, and despite the recent liquidation of Carillion, full year revenues before disposals are expected to be approximately 6% ahead of the prior year.”
Adjusted profit before tax for the year is expected to be ahead of the board's previous forecasts, the group added.
READ: Speedy Hire expects its full year profit “to be well ahead" of last year and slightly ahead of previous expectations
Return on capital employed is expected to reach 11%, up from 7.7% a year earlier.
“Crucially, not only is the 11% RoCE expected in FY18 well ahead of our previous forecast of 9.9%, it is also the first time in a decade that the group has generated a return at or above its cost of capital,” analysts at Liberum said.
Average asset utilisation for the 11 months to February 2018 was 55.4%, a 4.3% rise on the previous year.
Liberum said the increase in utilisation suggests the company’s strategy to optimise fleet and improve the underlying performance of its core rental business is paying off. The broker repeated a ‘buy’ rating on the stock.
Shares rose 5.9% to 51.16p in morning trading.