Growing demand in the UK roads market and improving weather conditions in the US triggered a year of record revenues and profits at Hill & Smith (HILS). The infrastructure and galvanising group generates 85 per cent of underlying operating profits from these two regions, where both economic growth and infrastructure spending are steadily improving.
The improvements either side of the Atlantic were particularly noticeable in the group's galvanising business. Snowstorms slowed down US construction activity at the beginning of 2014, but the higher-margin US market segment made up for that in the second half with production growth of 25 per cent. That turnaround helped offset rising zinc prices and negative currency effects, while boosting underlying operating margins in the galvanising business by 50 basis points to 20.3 per cent.
Revenues in Hill & Smith's roads division climbed 12 per cent to £128m, on continued high utilisation of the group's temporary barrier fleet in the UK. Further growth could stem from government plans to invest more than £15bn in roads over the next six years. A 62 per cent rise in the group's 2014 capital expenditure not only reflects increasingly advantageous conditions in Hill & Smith's main markets, but also the determination of the group to maintain its self-proclaimed status as "number one player".
Broker Investec expects adjusted pre-tax profit of £50.3m this year, giving adjusted EPS of 48.1p (from 43.4p in 2014).
| HILL & SMITH (HILS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 612p | MARKET VALUE: | £477m | |
| TOUCH: | 606-610p | 12-MONTH HIGH: | 620p | LOW: 495p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 233p* | NET DEBT: | 53% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 374 | 35.3 | 32.0 | 12.7 |
| 2011 | 406 | 25.4 | 20.9 | 13.2 |
| 2012 | 441 | 35.2 | 33.9 | 15.0 |
| 2013 | 445 | 30.6 | 29.6 | 16.0 |
| 2014 | 455 | 36.9 | 35.1 | 18.0 |
| % change | +2 | +21 | +19 | +13 |
Ex-div: 28 May Payment: 3 Jul *Includes intangible assets of £126m, or 162p a share | ||||
