12 November 2020
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, provides a trading update for the four month period to 31 October 2020 ("the period").
During this period, the Group's key priority has remained the health, safety and well-being of its employees. We have continued to follow all public health advice and maintained enhanced hygiene, social distancing and other best practice measures across all of our facilities.
The Group has seen an encouraging recovery in trading during the period, with revenue of £235.2m, 3% lower than the same period last year (2019: £243.6m). We are also pleased to report that underlying operating profit was ahead of the prior year due to improved margins and tight cost control across the Group's three divisions.
Roads & Security performed as expected during the period. In the UK, further details of the government's Road Investment Strategy have been confirmed, with new Smart Motorway schemes now expected to commence in the second half of 2021. In the US, our Roads business continues to deliver a strong performance and in September 2020 we were encouraged by the extension of the Federal road funding bill (FAST Act) for an additional year. We have continued to experience challenges in our security businesses due to COVID-19 restrictions on public gatherings and delayed customer spend.
The Utilities division performed well with operating profits ahead of the same period last year, supported by good levels of demand in our US composites and power transmission businesses. In the UK we are continuing to see an encouraging recovery in trading in both our building products and industrial flooring businesses.
In Galvanizing, volumes are continuing to recover from the weakness seen in Q2 2020 with total Group volumes 6% below the same period last year. During the period, the businesses have benefitted from lower zinc input costs and ongoing tight cost control which have supported operating margins, with operating profit at similar levels to the prior year.
Financial Position and Liquidity
The Group continues to be cash generative and maintain a strong liquidity headroom position with a robust balance sheet. Net debt as at 31 October 2020 was £158.1m compared with net debt of £195.4m as at 30 June 2020. At 31 October 2020, the Group had £219.1m of headroom against its borrowing facilities of £348.4m (£335.2m committed, £13.2m on demand).
Medium term guidance remains difficult given the continuing uncertainties arising from the COVID-19 pandemic. However, assuming end markets continue to remain open, we now expect the Group's FY20 operating profit to be slightly ahead of the top end of the current analyst forecast range*.
Looking forward, we continue to focus on the growth opportunities across our portfolio. In particular, the Group remains well placed to benefit from likely government stimulus through investment in infrastructure schemes.
Following a thorough handover of responsibilities and with trading now back at more normalised levels, Derek Muir will be stepping down from the Board today, with Paul Simmons formally taking over as Chief Executive.
Commenting on the trading update, Derek Muir said:
"This has been a strong performance over the last four months. I would particularly like to thank all of our employees for their continued commitment to the business.
It has been an honour and a privilege to lead Hill & Smith over the past 14 years, and I wish Paul and the Board well as they take Hill & Smith through its next phase of growth."
Paul Simmons said:
"I would like to thank Derek for all his support during the well-run handover process. Having spent the past few months understanding our businesses in more detail, I am excited about the growth potential within the business and look forward to leading the Group through its next stage of development. I am encouraged by the robust trading performance during the period, with the Group benefitting from our positions in non-discretionary markets and have been impressed by the dedication and continued resolve of our people during these challenging times."
The 2020 interim dividend of 9.2 pence per share, announced on 5 August 2020, will be paid on 8 January 2021 to shareholders on the Hill & Smith register on 4 December 2020. The ex-dividend date is 3 December 2020.
The Group's preliminary results for the year ending 31 December 2020 are scheduled to be announced on 10 March 2021.
* The current analyst forecast range for FY20 operating profit is £61.6m to £64.7m.
- 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 nor should it be taken to mean that earnings per share of Hill & Smith in the year ending 31 December 2020, or in future years, will necessarily match or exceed the Group's historical earnings per share.
For further information, please contact:
Hill & Smith Holdings PLC
Paul Simmons, Chief Executive Tel: 44 (0)121 704 7430
Hannah Nichols, Chief Financial Officer
Andrew Jaques/James Bavister/Catherine Chapman Tel: 44 (0)20 3128 8170
Notes to Editors
Headquartered in the UK and quoted on the London Stock Exchange (LSE: HILS.L), Hill & Smith Holdings PLC employs some 4,400 staff and serves its customers from facilities principally in the UK, France, USA, Sweden, India and Australia. The Group's operations are organised into three main business segments:
Infrastructure Products - Roads & Security, supplying products and services such as permanent and temporary road safety barriers, hostile vehicle mitigation products, street lighting columns, bridge parapets, temporary car parks, variable road messaging solutions, access covers and security fencing.
Infrastructure Products - Utilities, supplying products and services such as pipe supports for the power and liquid natural gas markets, energy grid components, composite products, building products, industrial flooring and handrails.
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.