Shares in infrastructure equipment firm Hill & Smith (HILS) reached an all-time high after it raised FY26 earnings guidance. Based on its strong start to the year, the company now sees operating profit at the top end of analysts’ forecasts.
US driving upgrades
In a four month trading update ahead of today’s AGM, the group said trading had been slightly ahead of expectations. Demand for infrastructure projects in the US, its largest market, drove a 10% increase in US organic growth and a 5% increase across the group.
US Engineered Solutions, which builds critical infrastrutcure from electricity substations to road barriers and railway platforms, delivered ‘strong’ growth. The Galvanizing Services business also delivered a strong performance, also driven by demand in the US market combined with ‘solid’ growth in the UK.
UK and India Engineered Solutions was held back by subdued UK demand, as the company expected. The previous year benefited from several transport infrastructure projects which didn’t recur this year.
Moves are afoot to improve the performance of the UK business, including the sale of VRS, the permanent steel road barrier maker. Meanwhile, investment is being directed at the US where recent acquisitions Freeberg and Hentech are bedding in.
Hill & Smith is one of a number of UK firms cashing in on the US infrastructure boom. The need to upgrade the electricity grid, water and road infrastructure means good long-term revenue visibility. In addition, the US is investing heavily in data centres and renewable energy sources to power them.
By making acquisitions in the US, Hill & Smith is also benefiting from the ‘reshoring’ process. US companies are increasingly looking to procure goods and services from locally-based companies and shorten their supply chains. By acquiring trusted suppliers, Hill & Smith acquires more customers which translates into more orders, more revenue and more earnings.
Read the press release here:
https://hsgroup.com/investors/reports-and-presentations
