Hill & Smith first-half profits rise; FY outlook lifted

Transport infrastructure group Hill & Smith said on Wednesday that first-half profit and revenue rose amid a good recovery in trading across all of its divisions, as it upgraded its outlook for the year.

In the six months to the end of June, reported pre-tax profit was up 7% at £20.8m on revenue of £354.2m, ahead 12% on the first half of last year. The company declared a dividend of 12p a share, up from 9.2p.

Hill & Smith said trading in the first half had been "encouraging", with revenue and operating profit growth ahead of the same period last year, which was dented by Covid-related disruption from the middle of March.

The company pointed to a good recovery across its divisions, with the roads sub-division delivering revenue and profit ahead of 2020 and 2019. This reflects continued strong levels of demand for its products in the US and a solid performance in the UK.

"While our security businesses delivered an improved performance compared to the same period last year, the sub-division continued to face challenges due to Covid-19 restrictions on public gatherings and delayed customer projects," it said.

Meanwhile, the utilities division performed well, underpinned by strong demand for engineered composite solutions in the US and a good recovery in demand in engineered supports and UK utilities businesses. As a result, revenues and profits were ahead of 2020 and 2019.

"The group has made a good start to the year and, assuming end markets remain open, we expect FY 2021 underlying operating profit to be slightly ahead of the top of the current analyst forecast range, with a more balanced first half, second half weighting compared to prior years," the company said.

The current analyst forecast range for operating profit is between £81.8m and £84.6m.

"While we continue to face headwinds in raw material cost inflation and labour shortages, our local teams have acted quickly to mitigate the impact and expect to continue to do so."