Hill & Smith reports on 'encouraging' start to year

(ShareCast News) - Infrastructure product and galvanising services company Hill & Smith reported "encouraging" trading in the year to date at its annual general meeting on Tuesday.The company said trading to 30 April was ahead of the expectations set out at the time of its 2015 preliminary results in March.Revenue for the period was £163.1m, an organic increase of 2% over last year after adjusting for currency translation, and acquisitions and disposals.The positive translational impact of the dollar and euro against sterling increased revenue by 3% when compared to average exchange rates, the board said, though underlying operating profit and margin still remained ahead of the same period last year.In its road infrastructure division, implementation of the government's Road Investment Strategy was developing in line with the firm's expectations and demand for its temporary safety barriers was "strong".On 13 May, Hill & Smith completed the acquisition of Safety and Security Barrier Holdings, trading as Hardstaff Barriers for a total cash consideration of £11m on a debt-free, cash-free basis.The acquisition was being funded from the group's existing bank facilities, and was expected to be earnings enhancing in the first full year of ownership.Internationally, the roads infrastructure division was continuing to make progress with results ahead of the prior year.On 1 April, the company completed the acquisition of Swedish safety barrier, noise reduction screen and bridge parapet firm FMK Trafikprodukter for a cash consideration of £2.9m.In its utilities infrastructure business, demand patterns in the UK were below those of a strong comparative period last year, "however order intake has been good and current backlogs support a much-improved second and third quarter of the year," the board said in a statement.In the US, the transmission substation business was continuing to perform strongly."Despite significant quoting opportunities, our composite material operation has experienced a slower than expected start to the year resulting in lower profitability."On 20 January, it completed the acquisition of the trade and assets of E.T. Technologies, a designer of composite bridges for pedestrian, equestrian and light vehicle applications.Cash consideration of $1.8m was paid at the time, with a further $0.2m due in 2016.In March, the firm announced the restructuring of its non-US pipe supports businesses with operations in the UK, Thailand, China and India.The restructuring programme is proceeding, Hill & Smith's board confirmed, and is expected to be complete in early 2017.In the galvanising division, reported volumes were 10% ahead of the same period last year and organic volumes were 5% ahead.Solar and wider infrastructure markets were continuing to drive a strong performance in the US, the company said, with volumes and profitability ahead of last year.Volumes improve marginally year-on-year in France, though economic conditions remained subdued and lower margins were the result."The group has delivered a strong start to the year despite mixed end market conditions," said Hill & Smith group chief executive Derek Muir."Although some markets are expected to remain challenging, 2016 is again expected to be a year of good progress," he added.