Billington back in the black as new focus pays

The Barnsley-based group is now working on new areas with Network Rail, but can’t give details due to confidentiality agreements.

It is currently building a new concourse and bridge across the East Coast mainline at Wakefield Westgate station and introducing disabled access at Thornton Heath station including a bridge with lifts and ramps to provide disabled access to all platforms.

It is also working in the energy sector and has just completed a contract at Drax Power Station in North Yorkshire.

The group’s Billington Structures division supplied new pipe bridges and co-firing structures at the power plant in Selby which is transforming itself from one of Europe’s biggest polluters to a predominantly biomass-fuelled generator delivering low-carbon, low-cost and reliable renewable power.

Billington’s chief executive Steve Fareham said the market is still challenging although there are encouraging signs of stability.

“We’re semi-optimistic,” he said “There are definite signs of recovery but it’s fragile.

“We’re seeing opportunities from the North to the South. We’re not seeing any North/South divide. The whole country is coming back to life.”

The group reported pre-tax profits of £250,000 in the six months to June 30, an improvement on the £200,000 loss the previous half year.

Revenue fell 15 per cent to £17.2m after the group ditched low-value production work in favour of better paying contracts.

Billington is in the process of pulling away from the competitive market to focus on more niche, added value, complex work.

“We’re trying to be more selective and take on contracts where we can add value,” said Mr Fareham.

Analyst Matthew Davis at WH Ireland said: “Interim results to June 2013 demonstrate a further improvement in profitability as the group continues to benefit from targeted operational efficiencies, an increasingly stable price/volume environment and a greater focus on margin-rich contracts.

“Although management still characterise the market as ‘fragile and challenging’, recent industry data and trading results from companies in the broader sector illustrate increasing confidence, albeit from a low base.

“Given the relative strength of the first half results and indications that trading continues to stabilise, we further increase our pre-tax profit expectation for 2013 by 16 per cent to £700,000.”

Billington made 85 redundancies during the first six months of the year, leaving the group with around 280 employees.

It also switched from double-shift to single-shift operations at its factories in Barnsley and Bristol.

The group said there are no plans for any further redundancies within its core Billington Structures division.

Mr Fareham said the results from its Peter Marshall Stairs subsidiary are lagging behind the rest of the group.

“We’re still struggling to establish a position in that sector,” he said, adding that the division makes up around five per cent of group turnover.

A new management team is now in place and the group said it is cautiously optimistic that the market will pick up in the second half of 2013.

The group said it had reluctantly decided not to pay an interim dividend in order to maintain cash reserves in an unstable market.

Finance director Trevor Taylor said: “It’s been a couple of tough years. We’ll look at reinstating the dividend as soon as we feel the recovery is sustainable. We’ll review it when we publish the next accounts.”

Mr Fareham welcomed the compulsory introduction of CE marking, which shows that a product complies with EU legislation, into the structural steelwork industry from next summer.

“This should help to put more stability back into the sector,” he said.

“Some of the more enlightened major contractors are already insisting on restricting their tender lists to CE compliant steelwork contractors, of which Billington was one of the first to achieve this high standard.”

Billington said its site security hoarding division worked on a number of major projects including Heathrow Terminal 2, Guy’s Hospital in London, major installations for the Ministry of Defence and a number of school projects.

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