LONDON (Alliance News) - Infrastructure products group Hill & Smith Holdings PLC Tuesday reported a slight increase in profit for the first half, following an improved contribution from its utilities arm.
The company posted pretax profit of GBP16.0 million for the six months ended June 30, up from GBP15.7 million a year earlier, as revenue rose 1.0% to GBP223.8 million from GBP221.6 million a year earlier.
The group reports in three segments: Infrastructure Products - Roads; Infrastructure Products - Utilities; and Galvanizing Services. All experienced contrasting fortunes.
Hill & Smith said its utilities business, which has been beset by a number of problems in recent times including one-off major projects not being repeated, recorded a much improved performance. The utility unit's struggles dented group profit in 2013.
Infrastructure products for utilities revenue dipped slightly to GBP99.4 million in the recent half year from GBP101.5 million a year before, although it was 1% higher at constant currency. Operating margin in the segment also improved to 4.6% from 2.5%.
Hill & Smith said Creative Pultrusions, its composites company in the USA, entered the year with a strong backlog in orders across all product sectors, including original equipment manufacturer customers. In addition, the company said projects for fender piles and sheet piling are encouraging for the second half as its composite products gain greater acceptance in the waterway market.
Infrastructure products for roads revenue rose 5% to GBP59.3 million from GBP56.5 million a year earlier. In the UK demand for permanent and temporary barriers has been strong as the Highways Agency implements the UK government-sponsored roads investment plan, the company said. However, operating margin for the division slipped to 9.1% from 9.6%.
Galvanizing services - which offers corrosion-protection services to the steel fabrication industry with multi-plant facilities in the UK, France and USA - saw revenue rise to GBP65.1 million from GBP63.6 million a year earlier despite negative currency movements of GBP2.7 million. Operating margin dipped to 19.2% from 19.3%.
The company said the unit was boosted by a GBP3.2 million contribution from Medway Galvanising Co Ltd, a single-site galvanizing and powder-coating business operating in Kent. Medway was acquired in April 2013 in a deal worth GBP6.4 million.
Financially, group net debt at the period-end stood at GBP98.5 million, up from GBP87.2 million at December 31.
Looking ahead, Hill & Smith said conditions in many of its end markets are generally encouraging and therefore provide a solid platform for the remainder of 2014 and beyond.
However, the company said it is "mindful of the level of comparatives from our record second half underlying earnings per share performance in 2013, the continued weakness of the French economy and the strengthening foreign exchange headwinds currently being experienced."
On the back of its performance the company increased its interim dividend to 6.4 pence from 6.0 pence a year earlier.
Hill & Smith shares were up 2.2% at 519.12 pence Tuesday morning.