A digger hire group suffered a pre-tax loss of £731,895 as more contractors opted to buy their own machinery in a boom period for the construction market.

HE Group, which runs excavator rental firm HE Services (Plant Hire), saw sales slip 4% to £18.6 million in the year to the end of May 2016.

The Strood-based company, which also runs digger bucket and parts manufacturer Masterhitch Europe, had made a profit of £1.3 million a year earlier but endured a difficult year, according to its latest accounts.

In his company report, chief executive Huge Edeleanu said the UK plant hire market was “extremely competitive with hire rates being squeezed”.

The business still made an operating profit, although it fell 74% to £705,000.

It comes after HE Group’s crane hire rival Hewden, which employed 744 staff across 33 depots, tumbled into administration in November.

Mr Edeleanu, who founded tourist attraction Diggerland and also owns Tesla car rental business EVision, said revenues were affected by “an abundance of plant hire in the UK market” which he put down to competitors buying larger quantities of machines than in the past.

“The abundance of plant resulted in an increase in competition in what was already an extremely competitive market driving down hire rates across the industry..." - Huge Edeleanu, HE Group

He claimed this was “following the increased levels of activity within the construction market during 2014/15”.

Meanwhile he said the strength of the pound before the Brexit vote meant second-hand excavators were not leaving the UK market.

He said: “The abundance of plant resulted in an increase in competition in what was already an extremely competitive market driving down hire rates across the industry. We believe that balance is now redressing as plant begins to move again.”

To combat the tough results, the firm reduced the size of its fleet, spending £18 million on new machines and selling about £20 million’s worth.

The company, which employs about 195 people, made a profit of £1.9 million on the disposal of second hand machines “as exacting buyers from around the world continue to recognise that ex-hire plant from the HE fleet is amongst the best available”, according to Mr Edeleanu.

Mr Edeleanu remained bullish about the firm’s prospects in the current financial year, hailing his firm’s ability to sell second-hand plant quickly.

He said: “This model has proven itself over the last three decades, not least during the recent financial crisis, from which we emerged healthy and intact where many of our competitors did not.”

He added: “The pound is weaker now which helps us. Our workload has picked up 5% this year and the Government says there will be lots of infrastructure spending in the future on things like HS2 and Hinkley Point.”