Speedy Hire Plc (LON:SDY) has hiked its interim dividend by 20% as its strategy for targeting SME customers helped profits more than double in the first half.
The tools and construction equipment rental firm reported a pre-tax profit of £13.2mln for the six months to 30 September, up 120% on the same period a year ago, while revenues climbed 6% to £194.6mln.
READ: Speedy Hire dusts off Carillion demise to leave full year guidance unchanged
The company’s chief executive, Russell Down, said that the firm had seen strong growth in its SME customer base during the period following the introduction of a same day service premise.
In its UK division, revenues increased 5.1% to £175.4mln while gross margins expanded to 57.2% from 56.9% in the period.
International business also performed strongly during the period, with revenues in the segment rising 23.4% to £17.4mln while the share of results from its joint venture in Kazakhstan increased to £0.9mln from £0.5mln.
Speedy had shifted strategy earlier in the year to better target SME’s after the collapse of outsourcer Carillion, one of its largest clients, at the start of 2018.
As a result of the improved business, the group hiked its interim dividend 20% to 0.6p per share, with net debt dropping 0.6% to £62.7mln.
Looking ahead, Speedy said it was confident of delivering full-year results that were in line with expectations.
Shares “materially undervalued” says broker
In a note to clients, analysts at City broker Liberum said the results provided evidence that the group was continuing “to deliver on its strategic aims”, adding that “improving asset utilisation and significant share gains with SME clients suggest an encouraging outlook”.
The broker also said that with the balance sheet providing “an additional source of optionality in the medium term”, the shares were “materially undervalued” and pegged the stock with a 74p price target, a 27% premium on the last close of 58.2p.
In early trading Wednesday, Speedy Hire shares were steady at 58.2p.