Major infrastructure spending programmes in the UK and US are filling the coffers at Hill & Smith (HILS). Strip out the near-£16m impairment of goodwill and intangible assets at Paterson - the pipe support business that was acquired just days before the Fukushima disaster - and pre-tax profit soared 19 per cent to almost £25m.
The UK government's drive to invest in the nation's motorways was key to this success. High demand for barriers, bridge parapets and remote-controlled temporary traffic signs on the M1 and M3 motorways sent underlying operating profit in the roads division up 35 per cent to £7.3m.
Underlying profit in galvanising climbed a tenth to £14m as volumes grew 32 per cent in the US. Volumes were weaker in France and the UK and zinc prices were volatile, but plenty of higher-margin sales to small customers meant the division's underlying operating margin widened 0.6 percentage points to 19.8 per cent.
Bigger profit, coupled with careful use of funds, drove operating cash inflow up 77 per cent to almost £27m, prompting management to increase the dividend by 11 per cent. Broker Peel Hunt forecasts adjusted EPS of 49p for the year to December, rising to 52.1p in 2016 (44.4p in 2014).
| HILL & SMITH (HILS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 692p | MARKET VALUE: | £541m | |
| TOUCH: | 692-695p | 12-MONTH HIGH: | 720p | LOW: 520p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 225p* | NET DEBT: | 51% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 224 | 16.0 | 14.6 | 6.4 |
| 2015 | 233 | 7.1 | 5.6 | 7.1 |
| % change | +4 | -56 | -62 | +11 |
Ex-div: 19 Nov Payment: 5 Jan *Includes intangible assets of £108m, or 138p a share | ||||
