Engineering firm Hill & Smith Holdings is targeting takeover deals after wiping £58.6 million off its net debt.
The Solihull-based firm, which is involved in the galvanizing and construction markets, is on the acquisition hunt after improving cash flow and reducing net debt to £87.6 million at the end of the 2009.
Chief executive Derek Muir revealed the plans after the company posted a 7.2 per cent fall in revenues, to £389.7 million, but managed to increase pre-tax profits, not taking into account reorganisation costs, by 8.5 per cent, to £42.2 million.
He said: “We now have a fund available for acquisitions and we will be actively looking in the UK and beyond, and in the renewable and power generation market.”
Hill & Smith was forced to lay off staff in the US and France last year but expects to bring employment levels back up by the end of the year as conditions improve.
The firm’s infrastructure markets remained strong last year, but its galvanizing business, which has operations in the UK, France and the US, suffered a 19 per cent fall in sales.
However, the company has been cashing in on the Managed Motorways programme, including roadworks currently being carried out on the M5 and M6 running through the region.
It has also benefited from an accelerated Highways Agency maintenance programme and an £8 million contract to supply lighting columns over a five-year period.
Mr Muir said that while public sector spending was set to reduce, the company operates in markets where investment is expected to continue to be strong.
He said: “As we see Government spending possibly cut back we are in the right market for where the spending will take place.
“We expect the stimulus funding will remain strong into 2010,” he added.
“The Managed Motorways programme has been rolled out to seven projects across the country and that us a £2 billion contract for four contractors.
“Another area which is doing well for us is street lighting. We have won contracts in Hampshire and Surrey and we are still hoping to be awarded a contract with Amey in Birmingham.
“That is a very strong market for the next five years.”
Finance director Mark Pegler said the reduction in net debt had opened doors for Hill & Smith, which owns 24 companies, including Droitwich infrastructure products firm Pipe Supports and Halesowen galvanizing specialist Joseph Ash.
He said: “The key feature of the year was the reduction in net debt.
“That alleviates any concern about the debt and provides an opportunity for acquisitions going forward in 2010.”
