Shares in troubled tool rental group HSS Hire fell more than 20 per cent this morning after it warned sales will be "materially lower" than expected following a tough start to its second half.
Revenues fell 3.4 per cent in its first half, from £166.2m last year to £160.5m this year.
Adjusted pre-tax profits fell from £2.2m last year to a loss of £14.2m this year, while reported loss before tax fell to £30.1m this year, from £7.8m last year.
The company said it expected adjusted profit before interest, taxation and amortisation in the second half to be in the range of £8m to £11m.
Shares fell 20.7 per cent to 42.5p as the market opened.
Why it's interesting
Perhaps HSS' £100m IPO back in 2015 gave an indication as to the company's fortunes: having become one of the year's first flotations, shares slipped over four per cent on its debut, making it the worst-performing IPO that year.
Since then, it as issued several profit warnings, with shares falling by almost three-quarters, from the 210p it floated at.
Today new chief executive Steve Ashmore said significant operational change had been achieved during the first half, but added rental revenue growth and its cost base had both been "temporarily impacted", which led to reduced profitability.
He added that the group was "facing into these challenges" with £13m of cost-cutting measures.
"As a result of these actions the group returned to profitability in June with revenue in growth for the first eight weeks of the third quarter and this momentum will result in a stronger second half," he said.
What HSS Hire 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. On this basis we expect second half adjusted Ebita profit to be in the range of £8m to £11m.
The new leadership team is currently conducting a thorough review of the group's strategy to gain profitable share in what remains an attractive and fragmented market. We will update the market on the outcome of this process during the fourth quarter.