Infrastructure engineer Hill & Smith (HILS) rewards shareholders with a 20% dividend hike as pre-tax profit jumps by nearly a third in the first half.

The company, which makes safety barriers for roads, says increased underlying profit was driven by growth in its UK and US operations.

Shares are up 4.6% to £11.24.

Underlying revenue has risen from £233 million in 2015 to £254 million in the six months to 30 June, while organic revenue growth increased by 6%.

The company also announces the acquisition of traffic management systems developer Signature for £12.5 million on a debt and cash free basis in a bid to enhance the group’s earnings.

In addition, five infrastructure acquisitions have been completed, while the non-US pipe supports restructuring remains on track.

In the US and UK, galvanising plants have been performing well, which offsets any weaknesses from the French business.

The lighting column business in France has been able to increase volumes and profitability, despite operating in a difficult trading market.

Hill & Smith believes it is too early to assess the impact of the Brexit vote but has not experienced any impact so far.

Numis is broadly positive, particularly about the company’s long-term prognosis for UK roads and investment, but, noting the high earnings multiple of nearly 17x, changes its recommendation from ‘add’ to ‘hold’.

The broker warns of slowness in the US galvanising business takes a cautious view of the impact of Brexit next year.

Issue Date: 04 Aug 2016