Hill & Smith reports record full-year trading performance

Construction and infrastructure products specialist Hill & Smith reported a record trading performance in its preliminary results on Wednesday, with a 14% organic constant currency revenue and profit growth, to £732.1m and £97.1m, respectively.

The FTSE 250 company said the growth was driven by its US businesses, which represented 64% of group operating profit.

Its operating margin also increased by 90-basis points to 13.3%, which it put down to strong operational performance, pricing actions, and portfolio evolution.

Hill & Smith reported an underlying profit before tax of £87.9m from continuing operations, up 23%, and underlying earnings per share on the same basis of 85.4p, rising 22% year-on-year.

The group said it made significant progress in portfolio management, having announced two value-enhancing acquisitions in October of National Signal, a high-growth US off-grid solar lighting business for £24.2m; and Widnes Galvanizing, expanding its galvanising footprint in the UK for £3.9m.

It also accelerated its US composites growth strategy with the acquisition of Enduro Composites in February for £28.7m.

Hill & Smith announced the completion of the acquisition of Korns Galvanizing on Wednesday, meanwhile, for £9.4m, which it said would further support growth in the attractive US galvanising market.

The firm disposed of France Galva in October for £62.0m, reducing its exposure to the lower-growth and lower-margin French galvanising market.

Its refreshed financial framework reflected its growth potential, the board said, as well as improved cash generation in the second half, with year-end covenant leverage at 0.7 times.

Hill & Smith’s board proposed a final dividend of 22p per share, making for a 16% increase on 2021, in line with its dividend policy.

The group said it was well-positioned in structurally growing end markets and expected to make further progress in 2023, despite macroeconomic uncertainties.

“Hill & Smith delivered a year of significant progress, particularly in our US-focused businesses,” said executive chair Alan Giddins.

“We also took material steps forward in improving the quality of the portfolio during the year, resulting in underlying profitability being ahead of market expectations.”

Giddins said that looking ahead, the group was exposed to a number of end markets which benefit from long-term structural growth drivers.

“We expect to make further strategic progress in 2023 and are well positioned for the longer term.”

At 1002 GMT, shares in Hill & Smith were down 4.24% at 1,354p.

Reporting by Josh White for Sharecast.com.