TOOL hire company Speedy Hire swung into the red during the first half as the recession-hit construction sector took a battering.

Speedy's revenues dived by 28 per cent in the six months to September 30, from £256.6m to £184.8m.

The company, based at Newton-le-Willows and led by chief executive Steve Corcoran, saw profits before exceptional costs of £23.8m wiped out as it posted losses of £4.8m for the period.

After one-off items, including restructuring through the closure of depots and job losses, Speedy slumped to losses of £13.6m.

Broker Altium Securities downgraded its recommendation from 'hold' to 'sell' and is forecasting losses of £5m for the full year. It expects Speedy to break even in 2011.

Shares fell 2.42 per cent to 30.75p, wiping nearly £4m off Speedy's market value of £160.3m.

Speedy, which also slashed its interim dividend from 1.7p to 0.2p, said cost reductions would deliver savings of £30m this financial year but would see exceptional charges of £10m, of which £6m was incurred during the first half.

The firm cut 326 jobs – seven per cent of its workforce – in the period and closed or merged 29 depots.

It axed nearly 1,000 jobs between July 2008 and March this year in an earlier round of cost-cutting.

Action

Speedy has also taken action to reduce its debts and, following a rights issue and improved cash generation, the figure was reduced by £113.6m at the start of the year to £134.8m.

Chairman David Wallis said: “Although the outlook for UK construction remains uncertain in the short term, the group remains well positioned in the market place, having taken aggressive steps to reduce further both its net debt and cost base, as well as driving through a number of initiatives to extend its competitive advantage and market leading positions.

“In addition, encouraging progress has been made in capitalising on the business's major client relationships in order to expand its presence in overseas markets and in non-hire services.”

Speedy is looking to grow its Middle East operations while in the UK it has signed agreements to supply tools, plant, generators and fuel to Welsh Water and WysePower, and has secured preferred supplier deals with support services group May Gurney and developer Headcrown.

Mr Wallis said Speedy's markets remain challenging but that monthly revenue declines year on year are expected to narrow from here.