Hill & Smith reports solid first half, but shares drop

Shares in Hill & Smith dropped on Thursday despite the company reaffirming recently upgraded full-year guidance after a solid first-half performance.

"Hill & Smith has delivered another good first half performance, underpinned by continuing strong demand for our products and services in the US and the strong performance from our most recent acquisitions," said executive chair Alan Giddins.

"We expect this momentum to continue into the second half in line with our recently upgraded expectations."

The infrastructure products and services provider said in May that full-year operating profits would be "slightly ahead" of the top end of market forecasts, which at the time were around £130.8m.

Hill & Smith reported revenues of £422.7m for the six months to 30 June, up 0.4% on last year but 2% higher at constant currency, which it said was driven by strong performance in Engineered Solutions and Galvanizing Services.

The operating margin improved by 130 basis points to 16.2% due to an improved portfolio mix and US volume growth, helping pre-tax profit rise by 10% to £63.2m.

The company also lifted its interim dividend to 16.5p per share.

Looking ahead, Hill & Smith said it continues to see a strong M&A pipeline following three acquisitions so far this year for a total of £22.3m, which includes Thursday's announced £10.6m purchase of composite utility poles supplier Trident Industries, based in Illinois.

Giddins said: "In the medium to longer term, the group is well positioned in infrastructure markets with attractive structural growth drivers. This strong position, together with our ability to use M&A to access new customers, markets and adjacent technologies, and the benefits of our agile operating model, underpins our confidence in the group's positive trading outlook."

The stock was down 6% at 2,030p by 0857 BST, having now dropped 12% since hitting a record high of 2,330p last week.