A new broom in Westminster hasn't clouded the issue of infrastructure spending. If anything, it appears that Theresa May's administration might even take a more Keynesian line on big capital projects following the Brexit vote. That's good news for Hill & Smith (HILS), the Solihull-based infrastructure products and galvanizing services specialist, which rewarded the market's faith through a 20 per cent hike in the half-year dividend.
The group's reported figures had the desired effect, sending the shares up by around 5 per cent as the market assimilated a 20 per cent increase in underlying operating profit following margin expansion of 170 basis points. There was progress across all three divisions, with 6 per cent growth in underlying revenue once the impact of acquisitions and restructuring actions are accounted for.
The group's order book is being bolstered through the UK Government's Road Investment Strategy, while the restructuring of its loss-making non-US Pipe Supports operation should improve profitability within the utilities division. Meanwhile, Hill & Smith's galvanizing services performed strongly, with double-digit volume growth across both the UK and US operations.
Broker Investec anticipates cash profit of £86m for the full year, with accompanying EPS of 61.2p, against £72.4m and 50.4p in 2015.
| HILL & SMITH (HILS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,123p | MARKET VALUE: | £882m | |
| TOUCH: | 1,123p-1,125p | 12-MONTH HIGH: | 1,169p | LOW: 636p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 279p* | NET DEBT: | 45% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 233 | 7.1 | 5.6 | 7.10 |
| 2016 | 259 | 19.4 | 16.8 | 8.50 |
| % change | +11 | +173 | +200 | +20 |
Ex-div: 24 Nov Payment: 5 Jan *Includes intangible assets of £149m, or 189p a share | ||||
