Speedy Hire reports resilient performance amid market challenges, highlights ProService progress

That is a big claim, but it is not just management waffle. Asset utilisation improved by 1.5 percentage points to 55.4%, helped by the extra ProService activity. For a hire business, utilisation is crucial – the more often equipment is out earning money, the better the economics.

There is also a strategic logic here. Speedy has spent roughly £20 million over three years on its Velocity strategy to modernise systems, logistics, customer workflows and digital capability. ProService looks like the first major proof that this investment can open new sales channels rather than just burn cash.

My view is simple: if ProService lands as promised, this year’s weak earnings could end up being a low point. If it disappoints, the higher debt and dividend cut will look much more painful.

Why Speedy Hire profits fell despite stable sales

Here is the catch. Speedy’s margins got squeezed. Gross margin fell to 55.4% from 56.7%, while adjusted EBITDA margin dropped to 20.5% from 23.3%.

The reasons were fairly clear. The company faced lower average hire rates, wage inflation, higher national insurance and national living wage costs, plus the downside of operational gearing. Operational gearing means a business has a large fixed cost base, so when volumes soften, profits can fall much faster than revenue.

That is exactly what happened here. Revenue barely moved, but adjusted EBITDA dropped 12.0% and adjusted profit before tax swung from an £8.7 million profit to a £9.8 million loss.

There were also £17.6 million of non-underlying items, including transformation costs, restructuring, disposal costs and ProService-related professional fees. Statutory loss before tax came in at £32.3 million. The good news is that management says FY2026 was the final year of the Enable phase, and there will be no further transformation-related non-underlying items in FY2027.

Speedy Hire debt, dividend cut and going concern warning explained

This is the bit investors should not gloss over. Net debt rose to £159.0 million from £113.1 million, and leverage increased to 3.3 times EBITDA, above the group’s target range of 1.0x to 2.0x. That increase reflects investment in fleet, transformation, and the ProService transaction.

The board is saying this should come down meaningfully over the next 12 to 24 months. That is plausible, especially as FY2027 hire fleet capex is expected to fall to around £35.0 million from £53.0 million in FY2026. Lower spending should help cash generation.

Cash flow was actually solid. Underlying operating cash flow was £87.4 million, cash conversion was 102.3%, and free cash flow improved to £3.0 million. So this is not a business haemorrhaging cash.

Still, there is a serious risk flag in the accounts. The auditor’s report was unqualified, but it included an emphasis of matter regarding a material uncertainty related to going concern. In plain English, the company is not saying it is in immediate trouble, but it is admitting that if trading deteriorates more than expected or a key contract is delayed or lost, banking covenant pressure could become an issue.

That matters. Speedy says it remained compliant with covenants and had £36.0 million of cash and undrawn facilities at year end, but it also had to agree temporary covenant amendments. So the balance sheet is manageable, not comfortable.

Speedy Hire outlook for FY2027 looks better than FY2026

The near-term trading update was encouraging. Revenue to the end of May 2026 was around 2% ahead of the prior year, while adjusted EBITDA was around 13% up. That suggests the operational gearing that hurt results in FY2026 can work in the other direction when volumes improve.

Previously delayed customer projects are now said to be resolving, and secured contracts are mobilising as expected. Speedy also reconfirmed market guidance for FY2027, with analyst consensus at revenue of £475.3 million and adjusted EBITDA of £117.3 million.

That is a meaningful step up from FY2026. It also shows why the market may be willing to look through the current year’s losses if execution stays on track.

What Speedy Hire shareholders should take away from these FY2026 results

There is good news and bad news here.

• The bad news: profits fell hard, debt increased, leverage is above target, the dividend has been rebased, and the accounts carry a material uncertainty around going concern.
• The good news: revenue held up, market share appears to be improving, ProService is trading encouragingly, cash flow stayed robust, and early FY2027 trading has started well.

My overall take is cautiously positive, but only cautiously. Speedy Hire is asking shareholders to accept a rough year now in exchange for better earnings later. That can work, but it needs delivery – especially on ProService, margin recovery and debt reduction.

For retail investors, this is not a “safe and sleepy income stock” update anymore. The lower dividend and covenant sensitivity make that clear. But if management executes properly, FY2026 may end up looking like the investment year before a stronger FY2027 and FY2028.

So the result is mixed, but not dull. Speedy Hire has made a strategic bet. The next 12 months will tell us whether it was a smart one.