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Tool rental group HSS Hire remained mired in losses in 2016, as difficulties in its core rental business weighed on revenue growth.

Sales increased 9.6 per cent in the year to £342.4m, in line with analyst forecasts made after the company warned on profits in November.

The company’s preferred profit measure, adjusted earnings before interest, tax and amortisation, inched up 1 per cent to £20.5m, but on a statutory basis its pre-tax losses grew from £13.8m to £17.4m.

HSS said the losses reflected “a year of investment in new distribution network structure, including non-finance exceptional costs of £17m”, and stressed its progress in gaining market share in both the UK and Ireland.

The company said it will continue to “optimise” its operations this year, including the closure of a further 37 branches, and said it expects to see profit growth weighted toward the second half of the year.

HSS has had a difficult start to life as a listed company, issuing a string of profit warnings and overhauling its management team since its 2015 IPO. Shares in the group have lost more than 67 per cent of their value since it joined the stock market, including a 19 per cent slide since the start of 2017.

Its difficulties have been exacerbated by waning confidence in the UK construction industry, which has shown little sign of going away. IHS Markit’s latest purchasing managers’ survey released earlier this week showed growth in the industry slowing in March.

John Gill, HSS chief executive, said:

2016 was a year of significant operational change and investment for the group. The result is an enhanced operating platform that will enable us to deliver superior fleet avilability to customers right across our network, creating the foundation for future sustainable profit growth.

While we made good progress in key accounts, specialist rental and our fast-growing services business during the year, this was not matched by revenue growth in our core rental business and re-establishing momentum in this area is our primary focus in 2017 and beyond.

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