Roads lead to growth for Hill

BOLD Government promises on infrastructure do not just benefit the metals industry. They bode well for manufacturers in a variety of sectors, including Solihull-based Hill & Smith.

Once, Hill & Smith might have been considered boring. A broadbased engineer, the group is the UK’s leading supplier of road safety barriers, with a fleet stretching 215,000 miles, enough to cover every single paved road in the country. Hills also makes transformers and pipe supports for electric cables and galvanises steel to make it stronger and more durable.

The firm was led by Derek Muir for 14 years, a dyed-in-the-wool company man who knew the business inside out. Hills prospered under his watch and the shares rose in sync. Midas first recommended the stock in 2014, when the price was £5.49. When Muir retired last November, the shares were over £13.

Now Muir has been succeeded by Paul Simmons, an ambitious outsider who spent ten years at FTSE100 health and safety group Halma and 13 years at US multinational 3M.

Simmons wants to put some of his experience to work at Hill & Smith, selling weaker parts of the group, focusing on higher value areas and encouraging stakeholders to think about the business as an innovative firm that can play a central role in 21st Century industry rather than a standard engineer. He has brought in several senior people, scrapped around two-thirds of acquisitions that were planned by his predecessor and made an acquisition of his own choosing, Prolectic Services, which supplies solar-powered lighting to overnight construction workers on the roads and railways. Similar niche deals are likely.

Despite these changes, Simmons recognises that Hill & Smith’s core business is well positioned for the future. Most of the revenues are generated in the US and over here. With spending on the rise across roads, railways and energy distribution, demand for Hill’s products is expected to increase, from temporary road barriers and smart signage to transformers and other widgets for utility firms.

The galvanising service should see growing demand too. Galvanised steel makes buildings and bridges and the like last longer, helping users to improve their environmental credentials. Hill & Smith also makes composite products, with lower carbon emissions than concrete.

The group saw a dip in sales and profits last year, as Covid-19 disrupted parts of the business. But analysts expect figures to bounce back this year and next, with profits of £75 million forecast for 2021, rising to £82million in 2022. The group paid a 27p dividend last year, which should increase to 30p this year and 33p in 2022.

Traded on: Main market Ticker: HILS Contact: hsholdings.co.uk or 0121 704 7430