Hill & Smith confident of hitting target for 2014

SOLIHULL-based infrastructure products supplier Hill & Smith has said it remains on track to meet full year expectations after experiencing a strong trading period.

The company said that I the period between July 1 and the end of October trading had continued to be strong and in line with the outlook given at the time of the group’s interims in August.

In the Infrastructure division, it said the roads arms of the business in the UK continued to benefit from increased investment in the ‘SMART Motorways’ programme.  

“We have seen increasing evidence of the Government’s commitment to the Highways Agency spending plans and remain encouraged about the medium term outlook for this business. During the period we completed our investment of £15.5m in a further 95,000m of our temporary barrier fleet, increasing our overall fleet to 265,000m,” it said.

Internationally, it said its Scandinavian business continued to perform well.  This took into account regional economic conditions in France, where business was said to be “challenging” and in India, where the market was said to be gaining momentum following the hiatus in demand created by national elections earlier in the year.

In the Utilities sector, it said trading by its US composite materials operation was strong, with a number of promising opportunities being pursued for delivery later this year and next.  Investment in additional capacity by competitors has shortened lead times and raised pricing pressure in our transmission substation business, it added.

In the UK, its utilities businesses continued to be positive and it said it had made pleasing progress over the same period last year.
 
Its pipe supports business was said to be making good progress overall with profitability ahead of the same period last year.  In the US, it said it had seen an improvement in both the engineered and commercial pipe support markets and recent trading was more encouraging.  

Outside of the US, the business has experienced lower order intake than anticipated, principally due to major customers completing existing contracts at the expense of new orders. However, overall enquiry and quotation levels were said to be healthy. The order book for engineered pipe supports stands at £10.9m (June 2014: £14.2m) and notwithstanding an improvement in orders over the next few months, it said it was now expecting a slower start to 2015.

In its Galvanizing Services arm, overall production volumes were 6% ahead of the same period in 2013. Volumes in the USA were particularly strong, with year on year growth of 22% as demand continued to improve across a wide range of infrastructure related end markets.  

Construction of the group’s new plant in Memphis is nearing completion and will be operational by the end of the year.  Volumes in France and the UK were at similar levels to the prior year, which it said was a creditable performance, particularly in France where the wider economic conditions remain difficult.
 
Net debt at October 31, 2014 was £97.5m compared to £98.5m at June 30, 2014, reflecting normal seasonal working capital patterns along with an increased level of capital investment in organic growth initiatives.

In outlook it said: “Overall, conditions in many of our end markets are generally encouraging and, notwithstanding the adverse impact of year on year foreign exchange movements, we continue to expect the group to report good progress for 2014.  Accordingly, we remain on track to meet the board’s expectations for the full year.”