Engineering giant hails ‘resilient business model’ as growth returns
Engineering group Hill & Smith has hailed its “resilient business model” which helped the business return to growth in the second half of 2018 after what it called a “difficult” start to the year.
The Shirley-based group, which specialises in the infrastructure products and galvanizing services sectors, delivered underlying profitability for 2018 only marginally below the record prior year, driven by a robust performance from US and other international businesses and significant investment in new and replacement infrastructure.
For the year to the end of December, the company reported revenue of £637.9m, up from £585.1m. The company said that while underlying profits were only marginally below a year ago, a £6m writedown related to the purchase of Technocover in 2016 and other one-off charges dragged the statutory pre-tax profit figure 15% lower, to £59.8m.
Derek Muir, chief executive, said: “We returned to growth in the second half, a testament to our resilient business model, our leading positions in markets with clear long-term growth dynamics, and our ability to create our own growth opportunities by broadening and enhancing the range of products that we can offer. We do this both through internal product development and by targeting complementary acquisitions, and 2018 has been a busy and successful year in this regard.
“Our UK and US businesses, which represent the bulk of our activities, will continue to benefit from the significant ongoing investment in replacement and new infrastructure in those countries. In particular, the UK Government’s confirmed long-term commitment to increased investment in the roads network is very encouraging for our UK roads business, and our US businesses will benefit from the US Administration’s ‘Buy American’ policy for federally funded infrastructure projects. ”
In line with its growth strategy, Hill & Smith completed six acquisitions in the UK, USA and Scandinavia for its roads and utilities divisions for £45.2m.
After the year end, it completed the acquisition of ATG Access, a UK-based supplier of hostile vehicle mitigation perimeter security solutions, for a cash consideration of £22.5m.
The group also completed an amendment to its principal debt facility, extending the term to January 2024 and increasing the size by £50m to around £280m which it said will allow the group greater flexibility to pursue further growth opportunities.
On Brexit, Muir said: “Despite all the current well-documented political and macro-economic uncertainty, we are confident that our leading market positions, business model and financial strength put us in a strong position to take advantage of market opportunities as they present themselves. Whilst we continue to experience some short term uncertainty in the UK, we have reasonable expectations that 2019 will be a year of progress for the group.”
It was also announced this morning that Mark Pegler, group finance director will leave the company at the end of April. A search for his successor is underway.
