22 November 2017
Hill & Smith Holdings PLC
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 2017 to 31 October 2017 ("the period").
The Board is pleased to report that trading in the period was in line with its expectations set out at the time of reporting the Group's 2017 half year results in August.
Revenue for the period was £201.5m (2016: £189.6m, restated to include non-US Pipe Supports*), a 4% organic increase after adjusting for currency translation and acquisitions/disposals. The positive translational impact of the strengthening of the US Dollar and the Euro against Sterling increased revenue by 2% versus average exchange rates in 2016. Underlying operating profit and operating margin are ahead of the same period last year.
Markets - summary
Infrastructure - Roads
In the UK, as expected and previously reported, a small number of road schemes have been delayed into 2018 resulting in lower utilisation of our temporary safety barriers. We continue to expect a ramp up in activity towards the end of the first quarter in 2018 and for utilisation to improve on 2017. The restructuring of our Variable Message Signs business has proceeded to plan and trading is in line with expectations. Demand for our hostile vehicle mitigation security products, bridge parapets and lighting columns remains strong.
We continue to make progress in our international markets with Australia performing ahead of expectations. Elsewhere, USA and Sweden delivered good results.
Infrastructure - Utilities
The performance of the UK Utilities companies continues to be mixed with a lower year on year trading performance principally driven by reduced volumes from our solar frame business.
In the US, both the transmission substation and composite materials businesses performed well. On 22 August, we completed the acquisition of the trade and assets of Tower Tech Inc. ("Tower Tech"), a manufacturer of modular build, high efficiency composite cooling towers which offer ease of installation, low operating costs and longevity. Cash consideration of $3.1m was paid at completion. Tower Tech is being integrated into our Creative Pultrusions business, a long time supplier to Tower Tech, and furthers our strategy of enhancing our product offering to end users within infrastructure markets.
In India, our pipe supports business continues to experience strong demand from international customers and the business performed ahead of expectations. The US pipe supports business was impacted by lower volumes and, despite the lower cost base from recent consolidation of distribution centres, reported lower profitability.
Overall, revenue and profitability was ahead of the same period last year. Higher zinc input prices were successfully passed through to the end customer with the higher costs marginally reducing operating margin. In France and the UK, volumes were 5% and 4% ahead of the prior year respectively. Volumes in the USA were 5% below the prior year, principally due to the large LNG and solar projects running throughout most of 2016. Encouragingly, excluding these large projects, volumes were 4% ahead year on year.
Net debt at 31 October 2017 was £110.9m compared to £109.1m at 30 June 2017, principally reflecting acquisition spend plus the continuing impact of high commodity prices on working capital.
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 2017."
The 2017 interim dividend of 9.4pence per share, announced on 10 August 2017, will be paid on 4 January 2018 to shareholders on the Hill & Smith register on 1 December 2017. The ex-dividend date is 30 November 2017.
The Group's preliminary results for the year ending 31 December 2017 are scheduled to be announced on 7 March 2018.
*In the Group's results to 31 October 2016 the post-announcement trading results of the non-US Pipe Supports operations (revenue of £4.6m) were treated as non-underlying items given their quantum relative to the overall result for that period.
- Ends -
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
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, hostile vehicle mitigation products, street lighting columns, bridge parapets, temporary car parks and variable road messaging solutions.
Infrastructure Products - Utilities, supplying products and services such as pipe supports for the power and liquid natural gas markets, energy grid components, composite '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 4,200 staff, principally in 7 countries.