Shares in Hill & Smith Holdings (HLS) gained four per cent as the West Midland infrastructure and building and construction products group delivered some rare good news for the manufacturing sector.
The 184 year-old company, which generates 43 per cent of its profits abroad, announced a 45.5 per cent rise in underlying pre-tax profits to £21.1 million for the first half of 2008.
It further shrugged off the economuic gloom with a 50 per cent rise in interim revenues to £264.1 million in the six months to June 30.
Underlying operating profit, excluding one-off reorganisation costs and amortisations, rose by 58 per cent to £25.6 million. The half-time dividend has been increased by 19.4 per cent to 4.3p a share. The payout is covered 4.1 times by underlying earnings per share.
Cash generated from operations in the six months totalled £34.3 million, well ahead of the £10.2 million reported for the same period last year. Shares closed yesterday at 314.75p, a gain of 11.75p on the day.
Hill & Smith, which has its headquarters in Solihull, manufacturers a range of products for sectors ranging from rail maintenance, oil and gas, power generation, water treatment, health and safety and flood prevention,
Chief executive Derek Muir said H&S was keeping its competitors at bay through innovation. As an example, he said the group’s TopDeck Parking division had expanded a multi-storey car park at Gatwick Airport by 700 spaces in just 28 days.
“TopDeck, which provides temporary or permanent car parking solutions, has contributed to the group’s organic growth along with strong demand for our innovative Varioguard temporary barrier rental fleet,” said Mr Muir.
“The announcement by the Highways Agency last month of its intent to roll out its variable message sign active traffic management scheme will ensure that our Techspan operation will see volumes increase in the remainder of this year and throughout 2009.
“Our trading results for the first half of 2008 significantly exceeded expectations. Our strong presence in high growth market segments, allied to our new product development, gives us confidence for continued growth in the second half of the year and in 2009.”
Mr Muir said H&S’s “extremely able management teams across the group” had helped the company overcome an 80 per cent rise in steel prices since the start of the year by hedging and purchasing material at the start of a contract.
In July, the group completed its objective of the acquisition of 100 per cent of international galvaniser and fabricator Zinkinvent, with leading galvanising operations in Europe and the USA.
At the same time, the planned sale of the Zinkinvent galvanising only operations in Benelux and Germany was completed.
“The net effect of these transactions will be earnings enhancing and further benefits are anticipated from 100 per cent ownership of Zinkinvent’s key businesses in France and the United States,” said Mr Muir.
Chairman David Grove, who has announced that he will retire at the end of 2009, said: “The strategy of developing our core businesses by means of organic growth and selective acquisitions has been extended over the last two years such that the group is now an international business. This has created significant opportunities for further growth in the future.
“We are concentrating on a number of exciting developments which will deliver international growth over the coming years and demonstrate the demand for our product portfolio on a global basis.”