Shares in tool rental company HSS Hire fell by more than a quarter on Monday after it warned that second quarter trading was below expectations.
The tool hire firm was one of the first companies to float in the UK this year, raising £100m in February. Its share price has fallen 30 per cent since then and has traded above the 210p IPO price for only brief periods. The shares closed at a low of 134p on Monday.
HSS, which specialises in the rental of small tools, said its second quarter trading performance “was marginally below expectations” due to weakness in customer activity across a number of sectors, as well as reduced demand for cooling equipment.
The company reported an £8.5m pre-tax loss in its first full-year results as a public company in April, but insisted it had made an “encouraging” start to 2015.
However, this optimism was scuppered by Monday’s profit warning, and the company admitted earnings before interest, tax, depreciation and amortisation would only be “in line” with the same period in 2014.
The sales and share price performance of HSS are in contrast to rival UK-listed tool hire firm Ashtead, which recently raised its dividend by a third after posting a record full-year profit. Ashtead’s shares have risen 26 per cent in the past year.
Despite the weak sales performance, HSS said it was on track to open 50 new branches as planned in 2015, part of a strategy of withdrawing from the high street to focus on fewer, larger stores that can shift greater volumes of tools.
Some analysts remained optimistic about the company’s prospects.
The “weakness in customer activity . . . appears to have been a temporary phenomenon, likely to have been caused by uncertainty around the outcome of the general election,” said Alexander Mees, analyst at JPMorgan, who added that HSS had “strong prospects for organic growth in a growing market”.
The company said: “In June, we have seen customer activity begin to return to more normalised levels, with order books building into the second half of the year . . . We believe the group continued to take market share over the period.”
HSS recently bought All Seasons Hire, a heating, ventilation and air-conditioning hire group, for £11.4m.