News blog

Billington Holdings

  • BY: Andrew Hore |
  • POSTED: 14/09/2010 |

Billington Holdings has reported a sharp fall in profit in the first half of 2010 but this is in line with its expectations at the time of the 2009 figures.

The structural steel market has effectively halved in recent times but few competitors have left the market. They are all chasing a market of around 700,000 tonnes a year and prices and margins have been driven down.

Billington says that it is more optimistic than six months ago but there is little real chance of a significant upturn until 2012. A proposed joint venture with a rival steel structures company will help them to compete with larger rivals in the supply of structural steel to large tower block developments.

The figures are still being cushioned by older contracts at higher margins but this will work its way out of the business by the end of this year. A specialist tubular steel operation is being revived because competition is not as fierce in the niche.

Revenues fell from £29.7m to £21.3m in the six months to June 2010, while pre-tax profit slumped from £2.62m to £1.09m. Net cash is £6.94m.

Demand for easi-edge safety barriers remains strong and Billington has invested in additional rental equipment. The hoard-it sustainable site hoardings are also in demand.

Brewin Dolphin forecasts full year profit of £1.5m.

At 125p a share, down 25p on the day, Billington is valued at £16.2m. The shares are trading on less than 14 times prospective earnings.

The interim dividend has been cut from 3.25p a share to 2.75p a share. Last year’s total dividend was 10p a share – costing just over £1.1m. Billington would like to maintain the dividend, or keep reductions to a minimum, if it is practicable. A total dividend of 9p a share, which would be just about covered by earnings, would make the yield 7.25%.

Download the September edition of AIM Journal at http://www.hubinvest.com/AIMPDFSeptember2010_12.pdf

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