Speedy Hire (LON: SDY) is still expected to report improved profit for the year to March 2020 despite the initial effect of COVID-19. The equipment hire and services provider will report the full year figures on Tuesday.

There should not be any surprises in the figures themselves. Pre-tax profit is forecast to improve from £31.4m to £35m, which is faster than the 4% increase in revenues to £411m. This shows a continued improvement in margins.

Net debt is expected to decline from £89.4m to around £80m. By May, the figure had fallen to £68m. The bank facilities total £180m and last until October 2022. There should be limited requirements to invest in the hire fleet in the short-term. This provides plenty of comfort even if there is a worsening in trading conditions.

Trading

There was a one-third decline in revenues during April with some improvement during May. In the first week of June revenues were 17% below last year. One-third of staff were still furloughed at that time. There should be a further update on trading. Construction levels are improving so trading at Speedy Hire should continue in the same direction.

There should be news concerning the auditors review of Geasons Training. This has been a disappointment and the goodwill will be written-off.

There are also claims from a funding agency about overpayments of up to £2.6m. Hopefully, that will have been thoroughly investigated.

Future

Speedy Hire has a good balance sheet that provides flexibility for the future. It will be ready to take advantage of opportunities that may come about due to less well capitalised competitors in the sector.

The share price has recovered to 60.6p, which is nearly one-third lower than the 2020 peak. Revenues will be lower in the first half of this financial year and operational gearing means that profit will decline faster. There is no guidance at the moment, though.