Steel firm cheers investors
SHARES in structural steel firm Billington Holdings jumped eight per cent on the news that 2014 results will be ahead of market expectations following better trading in its second half.
The Barnsley-based firm saw its shares rise 12.5p to close at 172.5p as the market welcomed the news that the group’s revival is continuing apace. The news follows a 132 per cent rise in first half profits to £790,000.
Billington is hopeful that it will be in a position to restart dividend payments when full year results are announced next month.
The company, which supplied the steel for the Royal Shakespeare Company’s award-winning Stratford-upon-Avon theatre, said recent results have shown “real signs of improvement” in the structural sector.
Analyst Matthew Davis at WH Ireland said: “The key message is very positive, with results for the year to December 31 anticipated to be ahead of market expectations against a very healthy macro backdrop to the sector. As a result, we raise our 2014 revenue expectation by £1.0m to £45.0m.
“This results in a £300,000 increase in our pre-tax profit expectation to £1.8m. Reflecting the positive earnings momentum and broader sector multiples, we revise our target price to 220p from 200p, which would equate to a 2015 PER (price-to-earnings ratio) multiple of 16.4 times, still around a 30 per cent discount to Severfield. We reiterate our ‘buy‘ recommendation.“
The group is starting to see new work come on stream as it takes market share.
Following a dismal few years for the sector, Billington said that price is no longer the only factor contractors are looking at.
“They are now looking at the best supplier for the job - not who’s got the cheapest price,” said finance director Trevor Taylor.
Billington was hit hard during the downturn, but while many failed Billington managed to survive after a restructuring that included around 90 job losses, which represented 25 per cent of the workforce.
The group is now recruiting again and is warning there will be an industry-wide shortage of skilled labour unless manufacturers step up their apprenticeship schemes. Billington has taken on 20 apprentices, ranging from factory floor to project management.
The group announced a 35 per cent leap in revenues to £23.2m in the six months to June 30.