Shares in tool rental group HSS slumped by around a fifth on Wednesday, after the company warned that sales would be significantly lower this year than previously expected, following a tough start to 2017.
In the six weeks to July 1, the company reported that its loss before tax had climbed to £30.1m from £7.8m in the same period a year earlier. Revenue fell to £160.5m from £166.2m.
As a result, it said that it now expects adjusted profit before interest, taxation and amortisation in the second half to be in the range of £8m to £11m.
Shares in the company fell around 20 per cent immediately after the results, taking losses since the start of the year to around 45 per cent.
“HSS has been hit by Brexit with mid-sized and smaller customers hiring fewer tools as confidence has been sapped,” said Neil Wilson, a senior market analyst at ETX Capital.
He said that although the company’s larger customers have proved resilient, “confidence in the construction sector has undoubtedly taken a knock and the tool hire market is expected to grow more slowly in 2017 as a result”.
HSS has endured a turbulent ride since listing on the stock exchange in 2015.
Steve Ashmore is the company’s second chief executive in as many years and Mr Wilson said that there is evidence investors are losing patience with the firm’s recovery plan.
On Wednesday, Mr Ashmore said that management is “conducting a thorough review of the group’s strategy to gain profitable share in what remains an attractive and fragmented market”.
He said that an update on the outcome of this process would be provided in the fourth quarter of this year.