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Shares in FTSE 250 infrastructure group Hill & Smith Holdings (LON:HILS) dropped by 20.88% to 1,163p (as of 13:00 BST) as bad weather and project delays threatened profits. Revenues for the six months ended 30th June were up by 1% at £295.4 million, but pre-tax profits plunged 14% to £28.9 million. Management said that they did not expect to make up for this shortfall during the second half of the year.
Chief Executive Derek Muir said that: “Our US and other international businesses performed strongly in the first half, driven by the significant investment going into the replacement of ageing infrastructure and new infrastructure projects. As previously reported, however, our UK business experienced certain headwinds – specifically adverse weather in Q1, short-term delays to some road projects, and a more cautious UK investment environment. Consequently, first half results were below those expected at the time of our May trading statement. Raw material input costs in both the UK and USA, particularly zinc commodity prices, have been volatile and impacted operating margins.
Despite this disappointing first half performance, the fundamentals of our niche infrastructure markets remain encouraging, and, notwithstanding the more cautious investment environment in the UK, we continue to benefit from our industrial and geographical spread. Overall, we believe that our focused strategy of developing and investing in businesses with market leading positions in growth infrastructure markets, combined with our active and decisive approach to portfolio management, will provide continued growth and drive returns“.