Hill & Smith resumes dividends, eyes ramp-up in public sector spend on infrastructure

Hill & Smith resumed dividend payments and sounded a confident note on the outlook despite a sharp drop in half-year profits.

The company's chief executive offer, Derek Muir said: "We are seeing a gradual recovery in trading and assuming that end markets continue to remain open, we expect a stronger performance in the second half. It remains likely that governments will stimulate their economies through additional or accelerated infrastructure spending, which the Group is well placed to benefit from in the remainder of 2020 and into 2021."

The manufacturer of engineered products for the roads and utilities markets posted an 8% decline in sales for the six months ending on 30 June on constant currency terms.

On an underlying basis meanwhile, the onslaught of Covid-19 saw profits before tax drop by 39% to £22.8m and earnings per share slide from 37.5p one year ago to 23.1p.

However, the group said it had witnessed improved trading since April, with organic sales and profits both higher in the US and all its divisions having remained profitable over the front month of the year.

The outlook for infrastructure remained positive as well, the company said in a statement.

Helped by "cash preservation actions", the firm's cash generation had remained "strong" too, resulting in a "robust" financial financial position with net of £195.4m at period end and with approximately £193m of facilities headroom.

Hence management's decision to resume payouts with an interim dividend of 9.2p.