Ahead of full year results next week, Hercules has provided a strategic update this morning. The Group plans to divest its suction excavator business, which is now deemed a non-core activity. The proposed divestment, when completed, will materially reduce Hercules’ debt levels and improve free cash flow. It is also expected to contribute to higher profit before tax and EPS, plus enhanced returns for shareholders.
In our view, this looks like a sensible strategic decision, which will support the transition to a capital-light model and enable the Group to maximise opportunities in the core labour supply business. We will await further details before refreshing our forecasts after next week’s results.