HireQuip to consider relisting as earnings rise

HireQuip's hire revenue is forecast to hit $55.5 million. Photo / NZPA

Equipment rental company HireQuip - which had a brief stint as an NZX-listed stock over 2005-06 - has re-listing in its sights after reporting a recovery in earnings.

After some lean, post-recession, years, the company said it is on track to report earnings before interest, tax, depreciation and amortisation of $21.3 million for the year to June, up from $15.6 million in the 2010-11 financial year, and compared with $10.9 million in 2009-10.

HireQuip's hire revenue is forecast to hit $55.5 million in the year to June, from $51.1 million in 2010-11, and $44.3 million in 2009-10. The company has forecast hire revenue for 2012-13 of $61.2 million.

HireQuip director Rob Nichols said demand plummeted in the aftermath of the global financial crisis, which meant the company had to implement a comprehensive business improvement plan to fortify itself against the recession.

This involved branch consolidation, cost reductions and investment in its hire fleet.

Times were tough, and chief executive Brian Stephen said "special mention" should made of its landlords "who stepped up when asked to support HireQuip".

Nichols said that had it not been for the support of the company's bank, many of HireQuip's staff would have lost their jobs.

The company opened a new branch last month, Dyers Rd in Christchurch, and Nichols said it intended to acquire more businesses.

"With construction activity forecast to accelerate, acquisitions are back on HireQuip's agenda," Nichols said. HireQuip is nationwide but it has a strong South Island presence, particularly in Christchurch.

Nichols, a co-founder of the private equity investor behind HireQuip - Tasman Capital - said he believed the company would be a good candidate to return to the listed market.

"We are probably likely to look at that within a three-year period," he said.

Nichols said that if a float did happen, it was more likely to be in the form of a sell-down rather than an all-out sale. The company is also looking at undertaking a bond issue to raise its profile.

Market penetration in New Zealand of hired equipment was relatively light at 30 to 40 per cent, compared with 70 to 80 per cent in Australia, Britain, Japan and the United States, he said.

Originally based in Dunedin, HireQuip grew on the back of the big hydro projects, the Maniototo irrigation scheme and construction of the Tiwai Point aluminium smelter near Bluff.

In the 1990s, it bought North Island hire company Projex, which gave it a national footprint, and bought specialist hire company Powerhire in 2004.

The company moved its head office to Auckland after a management buyout, which was supported by Tasman Capital, having come to the market through a backdoor listing.

The three main equipment hire companies have about three-quarters of the market, according to Hirequip's numbers.

Porter Group, which specialises in heavy equipment hire, has about 29 per cent, HirePool has about 24 to 25 per cent, and HireQuip, which has 34 branches and more than 300 staff, has around 21 per cent.