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Hill & Smith shares drop after profit taking and disappointing trading update

The FTSE 250 infrastructure products maker reported that operating profit for the first four months of the year was lower than the same period a year ago
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The group's UK performance was hurt by project delays and bad weather

Hill & Smith Holdings PLC (LON:HILS) saw its shares fall in late-morning trading Thursday after a disappointing trading update saw profit taking after a recent run in the share price.

The FTSE 250 infrastructure products maker reported that operating profit for the first four months of the year was lower than the same period a year ago, while revenues fell to £185.1mln from £191.3mln previously.

Project delays and bad weather dent UK performance

Hill & Smith said there was positive trading in its international businesses; however the UK was hurt by project delays and bad weather. However, the group's UK performance started to recover in mid-March, it said. During the period, Hill & Smith completed four acquisitions for a total of £32.6mln.

"Despite project delays and the weather-impacted start to the year in the UK, conditions across our principal markets continue to be favourable. Overall, despite political and macroeconomic uncertainties, the board reconfirms that its expectations for the full year remain unchanged, albeit with a greater second half bias," said Chief Executive Derek Muir.

In the last 3 months to last close on May 16, the company has seen its share price rise just over 23%, from 1,193p to 1,470p.

In a note to clients, City broker Numis downgraded the stock to ‘Hold’ from ‘Add’ on valuation grounds after the share price reached its target for the stock.

The broker added: “In-line statement with stronger overseas being offset by weaker UK results due to weather and project delays, but no discernible impact from Carillion demise. This is going to lead to a greater H2 weighting to profits (expect 43/57 from 48/52 in 2017). Whilst this may raise some concerns, there are reasons to feel confident, including pick-up in Q2 inc M6 contract commencing and construction markets getting back on track.”

Shares were down 8.7% at 1,342p.

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