Lack of big infrastructure projects harms Hill & Smith
A SLUGGISH start to the year has seen Hill & Smith experience a 17% decline in profit before tax.
The group says a lack of large infrastructure projects has been a contributory factor.
Announcing its half year results to June 30, the Shirley, Solihull-based construction products supplier and safety barriers manufacturer reported pre-tax profit of £15.7m, down from the £18.9m achieved during the same period last year.
Revenue was down 1% to £221.6m from £223.8m and net debt increased to £102.5m from £86.8m in December 2012.
The firm says that after a slow first quarter, momentum picked up in the second quarter and there is good evidence of a sustained recovery for the second half
It said profitability from its roads business improved by 100% compared with same period last year
But its utilities business was unable to replicate the exceptional start to 2012 due to fewer large projects.
Galvanizing delivered a robust performance, with improved profitability in the US.
Derek Muir, chief executive, said: “After a slow first quarter, we are now seeing evidence of increased project momentum in infrastructure products and expect a stronger second half, albeit tempered by the reduced pipe supports order book for delivery in 2013.
“In galvanizing, the US remains strong at similar levels to 2012 with continued benefits from operational efficiencies and production from the new plant in Columbus as from April 2013.
“Whilst the French galvanizing market remains challenging, the UK is broadly in line with last year and will benefit from the acquisition of Medway Galvanising, which was completed on 30 April 2013.
“Overall, as previously indicated, we continue to expect a greater weighting towards the second half, although our full year performance is likely to be marginally below our previous expectations.
“The board remains confident that, in the medium to long term, our international diversity and market strength will continue to provide the resilience of performance seen in previous years.”
Creative Pultrusions, Hill & Smith’s composites company in the US was successful in supplying piling for coastal protection to the Statue of Liberty, New York and the boardwalk at Long Beach, New Jersey as part of the rebuilding taking place in the aftermath of Superstorm Sandy.
And for the second half, the business has secured coverboard projects amounting to $3.5m for the Hawaii and San Francisco metros, to be supplied in the final quarter of this year.
In April Hill & Smith acquired Medway Galvanising Company, which operates a large plant in Kent, for £6.4m.
Medway has a strong tradition in service for galvanizing, powder coating and shot blasting. This acquisition allowed Hill & Smith to offer enhanced galvanizing service packages throughout the south east of England.
“As part of the on-going strategy to optimise our UK network, we closed and sold our east London site located near the Olympic Park in July for a cash consideration of £2.5m,” the firm said.
