Hill & Smith Share News (HILS)

(ShareCast News) - Helped by an acceleration in the second quarter, engineer Hill & Smith cranked out a gleaming set of half-year numbers and galvanised investor spirits with a 20% dividend hike based on a positive outlook for the niche infrastructure markets in which it operates.The FTSE 250 company, which also announced an 'infill' acquisition of UK road lighting and signage specialist Signature for £12.5m, generated underlying revenue of £254m in the six months to 30 June, a 9% rise on the previous year, or 6% at constant currencies.Underlying operating profit was up 25% to £33m, as operating margins increased 170 basis points to 13%, with profit before tax swelling 28% to £31.7m, ahead of analyst expectations that were nearer £30m.Earnings per share expanded 27% to 30.7p and the dividend was hiked to 8.5p from the 7.1p at the same time last year.The US galvanizing arm was the star performer with 15% volume increase, with UK volumes up 7% and France only marginally weaker, to lift the division's revenue 17% and operating profits 33%. Roads revenues were up 20% and profits by 23%, utilities sales were down 4% but profits were up 10.Chief executive Derek Muir highlighted the record revenue and profitability, with improved underlying operating margins across all three divisions."We continue to benefit from our strong position in niche infrastructure markets, predominantly in the UK and US, where high levels of investment are fuelling demand for our products.He pointed to the UK government's road investment strategy that provides certainty of funding through to 2020/21 and "exciting progress" is now being made in the US and Australia roads businesses."In Utilities also, our UK and US activities are well placed to continue to benefit from the significant investment in the ageing infrastructure of those countries. In Galvanizing, notwithstanding strong comparatives in the second half, our US and UK operations are expected to more than offset any weakness in France."Broker Peel Hunt said the "excellent" results as profit beat its estimate of £29.1m, while the dividend was also higher than expected."With the share price past our price target, we are putting our recommendation and price target under review. However, in a sector where we see an increasing polarisation between those who can grow and those, the majority, that cannot and the continuation of the infill acquisitions, Hill & Smith continues to be a top performer."Analysts at Numis acknowledged the good progress, although expects the US galvanizing business to slow with the lack of the LNG contract and said "the impact of Brexit is, as yet, unclear" and so, while forecasts were upgraded, it eyed a possible £2m EBIT hit from Brexit for 2017.