Renew positive on outlook for infrastructure sector

Infrastructure engineering services company Renew reported a 17% improvement in its first-half revenue on Tuesday, to £366.4m.

The AIM-traded firm said its adjusted operating profit was up 11% year-on-year for the six months ended 31 March at £22m, while its operating profit was 16% higher at £18.5m.

Its adjusted operating margin was 40 basis points weaker at 6%, while its profit before tax advanced 19% to £18.1m.

Adjusted earnings per share were 14.1% higher than the first half of 2020, at 22.9p, and the board declared an interim dividend of 4.83p, compared to the nil distribution it made a year earlier.

The group’s order book stood at £750m at period end, up from £690m at the end of the first half of 2020, with the firm reporting “strong” organic revenue growth of 12%, underpinned by its performance in rail.

It said it had completed the de-risking of its balance sheet, with the completion of the Lovell Pension Scheme buy-in.

The reinstatement of the interim dividend reflected the group’s “strong” cash generation and positive outlook, the board said.

During the period, Renew acquired the J Browne Group for £29.5m in March, adding “material scale” to its water business in line with its strategic objectives.

Adjusted operating profit in engineering services totalled £22.2m, up from £20.5m year-on-year.

Looking ahead, Renew said trading had started “strongly” in the second half of the year, adding that it was confident in its future prospects, and well-positioned to capitalise on the increased investment in maintaining and renewing infrastructure assets.

“In this period, we completed the third substantial acquisition in three years and I was delighted to welcome the Browne team to the group - an acquisition which further strengthens our position in a key attractive infrastructure sector,” said chief executive officer Paul Scott.

“After reporting strong organic growth in the first half, trading has started strongly into the second half of the year and we look to the future with confidence.

“We are well-positioned to take advantage of the UK government's commitment to ‘level up’ the economy by investing £640bn in an infrastructure-led recovery that will bring significant opportunities for Renew and our differentiated, diversified, low-risk business model.”

At 1021 BST, shares in Renew Holdings were up 4.37% at 668p.