Fears that public spending cuts would prove a significant road block to crash barrier maker Hill and Smith appear to have been unfounded, as the firm performed ahead of expectations in the first half of the year.
The manufacturer and supplier of infrastructure products and provider of galvanizing services saw revenue rise 15% to £223.8m in the six months to June 30th from £195.1m in the first half of last year.
Reported profit before tax more than quadrupled to £18.9m from £4.6m the year before, while underlying profit before tax climbed 28% to £20.8m from £16.2m.
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The Infrastructure Products division saw strong organic revenue growth of 22%, with underlying operating profit up 41% year-on-year.
That put the performance of the Galvanizing Services division in the shade, where underlying operating profit was up 12%, driven by a good showing in the USA. The division's revenue increased by 5% to £63.0m from £59.9m the year before. Overall volumes were 8% ahead of the same period in the prior year.
On the subject of international earnings, the group drew attention to the fact that almost three-quarters of its operating profit is now earned overseas, with the US accounting for just under half of operating profits.
Net debt decreased to £89.1m from £103.8m at the end of 2011 as a result of strong cash generation during the period.
Underlying earnings per share climbed 31% to 19.7p from 15.0p the year before, paving the way for a 7% increase in the interim dividend to 5.8p from 5.4p last year.
"This has been a very encouraging six months for Hill & Smith, with our international spread, strong market positions and diverse portfolio of products and services serving us well in markets with mixed conditions. The end result was a performance ahead of our previous expectations," revealed Derek Muir, Chief Executive of the company.
Before shareholders light too many cigars, however, Muir reminded them that there is reduced activity in the UK due to the Olympics, with new road projects not commencing until the final quarter of 2012. This will affect Hill & Smith's business which entails providing road safety barriers, street lighting columns, bridge parapets, gantries, temporary car parks, variable road messaging solutions and traffic data collection systems.
"Furthermore we remain cautious about the level of economic uncertainty within Europe. Accordingly, whilst our first half performance has been encouraging, the outlook for the full year's performance remains unchanged," Muir advised.
However, the company was prepared to go so far to say that "there is greater evidence of the momentum experienced over the last twelve months, particularly in the USA and Asia, continuing throughout 2012."
The share price rose 8.75p to 315p in the first hour of trading on the day of the interim results announcement. The shares are 105 below their 52-week high.
JH
