On a day when equity markets were sharply weaker, shares in Hill & Smith rose 2 per cent, thanks to an upbeat set of interim figures that included a modest increase in pre-tax profits and a raised dividend.
The company provides road safety barriers, street lighting and bridges as part of its infrastructure products division, while its two other businesses provide galvanising services, and building and construction products. Operating in both the public and private sectors, Hill & Smith has been cushioned from the severe downturn in the private sector - which saw underlying operating profits fall by £2.1m to just £0.9m on the building and construction products side - by a robust performance from infrastructure products. Demand here pushed underlying operating profits up by 8.1 per cent to £11.1m, thanks mainly to a number of road widening schemes, with some of the work coming from the Government's accelerated infrastructure spending programme.
However, management is aware that government spending plans will be reined back at some point, and steps have been taken to diversify the revenue stream. And this is already showing positive signs, with 48 per cent of group profits now generated from overseas work, notably in France and the US. Net debt has also been significantly reduced by £40m to £106m as a result of favourable exchange rate movements, the sale of a galvanising company in the Netherlands for £4.9m, and strong operating cashflow.
Broker Evolution Securities expects full-year pre-tax profits of £41m and EPS of 34.9p (£38.9m and 32.2p in 2008).
| HILL & SMITH (HILS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 257p | MARKET VALUE: | £ 195m | |
| TOUCH: | 256-260p | 12-MONTH HIGH: | 344p | LOW: 138p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 157p* | NET DEBT: | 89% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 212 | 20.0 | 16.5 | 4.3 |
| 2009 | 197 | 20.2 | 18.1 | 4.7 |
| % change | -7 | +1 | +10 | +9 |
Ex-div:25 Nov Payment:07 Jan *Includes intangible assets of £109m or 143p a share | ||||
