News blog
Billington Holdings
- BY: Andrew Hore |
- POSTED: 17/03/2009 |
Billington Holdings produced better than expected profits in 2008 but 2009 will be much more difficult.
The structural steel and mining equipment supplier sold its non-core activities during the year. The continuing activities reported an improvement in sales from £70.1m to £78.3m. Pre-exceptional and amortisation profits rose from £4.8m to £5.2m.
The core Billington structural steels business held up well but prices are coming under pressure and projects are being delayed. The market has slumped but management says that the decline is nowhere near as bad as in 1990. There is still overcapacity in the sector and only a few companies have gone out of business. Billington is the fourth largest structural steels business in turnover terms.
Steel arch roof supports manufacturer Hollybank has benefited from demand from UK coal mines.
The Easi-Edge safety barriers hire business is gaining market share. Its revenues are not dependent on the core structural steel business gaining contracts so it should continue to trade well.
The Dosco tunnelling equipment business improved its performance but most of the sales were near to the end of the period. This had a negative effect on cash flow.
There was a cash outflow relating to working capital of £12.6m. The disposals generated £8.4m but there was still a decrease in cash. At the end of 2008, the cash balance was £3.98m but since then the cash balance has jumped to £10.6m. Cash of £7.8m is forecast for the end of 2009.
Shares in Billington fell 20p to 125p each, which values the company at £16.2m.
The weak construction market will hit this years figures. The focus on the public sector should make the structural steel business more resilient, especially as government spending on infrastructure will continue at high levels. Even so, it will be tough in 2009.
House broker Brewin Dolphin has cut its 2009 profit forecast from £5.3m to £3m, which puts the shares on a 2009 prospective multiple of seven. The dividend is forecast to be cut from 11.5p to 7p a share. That still represents a yield of 5.6%.
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