About half of Hill & Smith 's (HILS) business is done overseas, which meant sterling's strength held back otherwise decent growth in turnover in the first six months. At constant currencies, revenue increased 5 per cent, with organic growth contributing 3 per cent of that.
Hill & Smith provides barriers, gantries and the like to utility providers, construction groups and roadwork companies across the world. Encouragingly, business is now picking up after the post-recession dip in infrastructure spending. But the biggest boost to profits came from self-help measures in the utilities division, which generates about half of group turnover but only a fifth of profits. Divisional operating margins returned to a more normal 4.6 per cent, nearly doubling underlying operating profits to £4.6m.
The galvanising services division is the real money-maker, contributing about half of group profits. Volumes here climbed 8 per cent, primarily due to strong demand in the UK. Operating margins also remained strong at 19.2 per cent, helping underlying divisional profit rise 8 per cent.
Looking ahead, chief executive Derek Muir foresees strong trading in the roads division, which rents out the temporary barriers and signs used in road maintenance, as the UK Highways Agency is investing heavily to increase capacity on the existing network. Broker Investec expects adjusted EPS of 41.2p this year, rising to 44.5p next year (from 39.1p in 2013).
HILL & SMITH (HILS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 518p | MARKET VALUE: | £404m | |
| TOUCH: | 517-518p | 12-MONTH HIGH: | 570p | LOW: 413p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 218p* | NET DEBT: | 58% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 222 | 15.7 | 15.0 | 6.0 |
| 2014 | 224 | 16.0 | 14.6 | 6.4 |
| % change | +1 | +2 | -3 | +7 |
Ex-div: 19 Nov Payment: 6 Jan *Includes intangible assets of £122m, or 157p a share | ||||
