TIDMHILS
RNS Number : 3866P
Hill & Smith Hldgs PLC
17 November 2016
17 November 2016
Hill & Smith Holdings PLC
Trading Update
Hill & Smith Holdings PLC ("Hill & Smith" or "the
Group"), the international group with leading positions in the
supply of infrastructure products and galvanizing services to
global markets, today issues a trading update covering the period 1
July 2016 to 31 October 2016 ("the period").
Current Trading
The Board is pleased to report that trading in the period has
continued to be encouraging and that it expects Group trading
performance for the current financial year to be at the top end of
market expectations. The Group's results will also benefit from the
positive translational impact on its overseas earnings from the
recent weakness in Sterling.
Underlying revenue increased by 15% to GBP185.0m (2015:
GBP160.8m), with translational currency benefits contributing
GBP9.1m or 6%. After adjusting for additional revenue of GBP12.7m
from acquisitions and reduced revenue from restructuring actions of
GBP6.8m, organic underlying revenue growth was GBP9.2m or 5%.
Underlying operating profit and operating margin are ahead of the
same period last year.
Markets - summary
Infrastructure - Roads
In the UK, implementation of the Government's Road Investment
Strategy continues to develop in line with our expectations and
demand for our temporary safety barrier has been strong. In
September 2016 we committed to expanding our temporary safety
barrier rental fleet by a further 10,000m to 280,000m to support
expected demand levels from the second half of 2017. Our portfolio
of other products have also performed well in the wider UK
market.
On 4 August 2016, the Group announced the acquisition of
Signature Limited ("Signature") for a cash consideration of
GBP12.5m. Signature is a UK based business which specialises in the
development, installation and maintenance of street lighting
columns, road sign and traffic management systems. The business
complements and expands our product offering in the UK roads market
and has been integrated into our existing lighting column
business.
Internationally, overall we continue to make pleasing progress.
Results are ahead of the same period last year, principally driven
by a strong performance in our US business where we continue to see
a growing acceptance of our steel temporary safety barrier.
Infrastructure - Utilities
As expected, following a slower first half, our UK Utilities
companies have delivered a much stronger trading performance in the
period. Operating profit was ahead of the same period last
year.
On 14 July 2016 we completed the acquisition of Technocover
Limited ('Technocover') for a cash consideration of GBP10.0m.
Technocover specialises in the development, manufacture,
installation and maintenance of high security access products for
the utilities markets. Technocover's suite of products is
complementary to our existing market offering and will benefit from
its integration with our UK Utilities division.
In the US, our composite material business has continued to
experience a lack of major contracts and, although underlying
volumes are reasonable, the results have been below expectations.
However, the transmission substation business continues to perform
strongly and ahead of expectations.
Although market conditions remain competitive, our Pipe Supports
business in the US delivered improved profitability and margins
over the same period last year, driven principally by demand for
engineered supports for combined cycle gas power plants. Recent
restructuring initiatives will reduce the cost base and improve
efficiencies within the business.
On 8 March 2016, we announced the restructuring of our non-US
Pipe Supports businesses. Plans to close manufacturing operations
in the UK and Thailand along with a sales office in China are ahead
of schedule and nearing completion. Our remaining Indian facility
has become our centre of excellence for the manufacture of pipe
support products outside of the US and is performing in line with
expectations.
Galvanizing
Reported volumes were 1% ahead of (organically 3% behind) the
same period in 2015. Management focus on production efficiencies
together with market leading quality and service helped to improve
margins year on year. In the US, against record comparatives in
2015, volumes were 7% lower, principally due to the phasing of
projects in the international temporary bridge market. However,
this was largely offset by increased demand from a significant
number of smaller infrastructure jobs, resulting in improved
margins and profitability similar to last year. In France, volumes
were 3% lower than last year but with a lower cost base as a result
of increased automation, and the benefit of restructuring actions,
profitability was ahead of expectations and similar to prior year.
Reported volumes in the UK were 13% ahead (underlying flat)
including the impact of the acquisition of Premier Galvanizing,
completed late last year. Focus on smaller, quick turnaround work
helped improve margins and as a result, profitability was ahead of
prior year.
Financial position
Net debt at 31 October 2016 was GBP127.4m compared to GBP99.5m
at 30 June 2016, principally reflecting GBP22.5m of expenditure on
two acquisitions. Unfavourable movements in exchange rates since
the half year on the translation of non-Sterling denominated debt
also added GBP4.4m.
Outlook
Derek Muir, Group Chief Executive, commented: "Overall,
conditions in many of our infrastructure end markets remain
favourable and we continue to expect the Group to report good
progress for 2016."
Financial calendar
The 2016 interim dividend of 8.5 pence per share, announced on 4
August 2016, will be paid on 5 January 2017 to shareholders on the
Hill & Smith register on 25 November 2016. The ex-dividend date
is 24 November 2016.
The Group's preliminary results for the year ending 31 December
2016 are scheduled to be announced on 8 March 2017.
- Ends -
All underlying measures include certain non-operational items,
which are defined in the Group's Half Year Results to 30 June 2016
and can be found on www.hsholdings.com. References to an underlying
measure throughout this trading update are made on this basis.
Cautionary Statement
This announcement contains forward looking statements which are
made in good faith based on the information available at the time
of its approval. It is believed that the expectations reflected in
these statements are reasonable but they may be affected by a
number of risks and uncertainties that are inherent in any forward
looking statement which could cause actual results to differ
materially from those currently anticipated. Nothing in this
document should be regarded as a profits forecast.
For further information, please contact:
Hill & Smith Holdings PLC
Derek Muir, Group Chief Executive Tel: +44 (0)121 704 7430
Mark Pegler, Group Finance Director
MHP Communications
John Olsen/Andrew Leach/Ollie Hoare Tel: +44 (0)20 3128 8100
Notes to Editors
Hill & Smith Holdings PLC is an international group with
leading positions in the design, manufacture and supply of
infrastructure products and galvanizing services to global markets.
It serves its customers from facilities principally in the UK,
France, USA, Sweden, Norway, India and Australia.
The Group's operations are organised into three main business
segments:
Infrastructure Products - Roads, supplying products and services
such as permanent and temporary road safety barriers, street
lighting columns, bridge parapets, gantries, temporary car parks,
variable road messaging solutions and traffic data collection
systems.
Infrastructure Products - Utilities, supplying products and
services such as pipe supports for the power and liquid natural gas
markets, energy grid components, "GRP" railway platforms and flood
prevention barriers, plastic drainage pipes, industrial flooring,
handrails, access covers and security fencing.
Galvanizing Services which provides zinc and other coatings for
a wide range of products including fencing, lighting columns,
structural steel work, bridges, agricultural and other products for
the infrastructure and construction markets.
Headquartered in the UK and quoted on the London Stock Exchange
(LSE: HILS.L), Hill & Smith Holdings PLC employs some 4,250
staff.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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