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Hill and Smith brings back dividend

Road and utilities company sees second-half recovery and plenty more sales opportunities in climate change-proofing infrastructure
March 10, 2021
  • Final dividend of 17.5p
  • Second half trading strength limited Covid-19 impact

In a year that was an extreme test of company balance sheet strength, Hill & Smith (HILS) diverted cash to knock almost £70m from its net debt and brought back the final dividend. This meant profits took a far bigger hit than sales, which were down only 7 per cent on a constant currency basis, to £661m. 

The company operates across the UK, US and Europe, supplying temporary transport infrastructure, utilities services and galvanising treatment for steel. 

The roads and security division saw the biggest operating profit decline, from £23m in 2019 to £13m last year, despite what seemed like an explosion of roadworks and temporary traffic lights in the UK during the pandemic. The utilities division was more stable and actually saw an increased operating profit margin on flat sales. 

Chief executive Paul Simmons said second half trading was close to that experienced in 2019. The company sees expansion opportunities from the changing climate, with Simmons highlighting Hill and Smith’s flood defence offerings and fire-resilient electricity transmission poles as growth products. Unfortunately, they will certainly remain necessary additions for utilities and cities. Buy.

Last IC View: Buy, 1,220p, 05 Aug 2020

HILL & SMITH (HILS)    
ORD PRICE:1,343pMARKET VALUE:£ 1.07bn
TOUCH:1,342-1,345p12-MONTH HIGH:1,486pLOW: 844p
DIVIDEND YIELD:2.0%PE RATIO:44
NET ASSET VALUE:403p*NET DEBT:46%
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201654048.343.026.4
201758570.268.630.0
201863859.859.931.8
201969561.861.110.6
202066135.530.226.7
% change-5-43-51+152
Ex-div:03 Jun   
Payment:09 Jul   
*Includes intangible assets of £189m, or 237p per share