Hill & Smith (HILS) saw its underlying operating profit plunge by more than a third at constant currencies in the six months to 30 June, after the infrastructure products supplier was hit by Covid-19 business closures and lower activity levels from mid-March.
In the ‘roads and security’ division – which accounted for 41 per cent of total revenue – both the temporary and permanent safety barrier businesses in the UK benefited from a quieter transport network during lockdown, enabling clients to proceed with their work. But the pandemic had a more severe impact on the security business amid the cancellation of public gatherings and customers delaying investments. This drove a 4.9 percentage point contraction in the overall division’s underlying operating profit margin to 3.4 per cent.
While the utilities-focused segment withstood pandemic pressure well, the ‘galvanizing services’ business – which provides metal coatings – was held back by plant closures and lower volumes.
Net debt has come down by 9 per cent since the December year-end to £195m, equivalent to 1.7 times cash profits. While the final dividend declared for 2019 was withdrawn, the group is handing shareholders a reduced half-year payout.
With a recovery in trading since April, Hill & Smith is guiding to a stronger second half. Peel Hunt forecasts adjusted pre-tax profit of £57m and EPS of 58p for the full year, rising to £69.4m and 70.2p the following year.
| HILL & SMITH (HILS) | ||||
| ORD PRICE: | 1,258p | MARKET VALUE: | £998m | |
| TOUCH: | 1,250-1,258p | 12-MONTH HIGH: | 1,534p | LOW: 844p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 414p* | NET DEBT: | 60% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 340 | 33.4 | 33.9 | 10.6 |
| 2020 | 316 | 19.5 | 19.7 | 9.2 |
| % change | -7 | -42 | -42 | -13 |
| Ex-div: | 4 Dec | |||
| Payment: | 8 Jan | |||
| *Includes intangible assets of £217m, or 273p a share | ||||
