Brexit, weather hits Hill & Smith as interim profits dive

Short-term delays in the UK's roads programme and utilities market along with bad weather and heightened Brexit uncertainties saw interim pre-tax profits fall 14% at infrastructure products maker Hill & Smith Holdings to £28.9m.

The company also warned it would not make up the shortfall in the full year.

There was a slight 1% rise in revenues to £295.4m as basic earning per share fell 13% to 28.2p. The dividend was increased to 10p a share from 9.4p.

Chief executive Derek Muir said the company's US and other international businesses performed strongly in the first half, “driven by the significant investment going into the replacement of ageing infrastructure and new infrastructure projects”.

However, the UK business experienced headwinds from the winter storms in the first quarter, short-term delays to some road projects, and a “more cautious UK investment environment” due to Brexit uncertainties, Muir added.

He said there were “evident delays in decision-making across a number of sectors” as the March 29 date for Britain's departure from the European Union drew closer.

“Consequently, first half results were below those expected at the time of our May trading statement. Raw material input costs in both the UK and USA, particularly zinc commodity prices, have been volatile and impacted operating margins.”

"While order books support a good second half, we now expect the performance for the remainder of the year to be more in line with our original expectations as set out in our 2017 preliminary results announcement. As a result, we do not expect to recover the shortfall experienced in the first half.”

Muir said that despite the “disappointing” the fundamentals of Hill and Smith's niche infrastructure markets remained “encouraging”.

“Overall, we believe that our focused strategy of developing and investing in businesses with market leading positions in growth infrastructure markets, combined with our active and decisive approach to portfolio management, will provide continued growth and drive returns," he said.