Renew Holdings PLC (LON:RNWH) shares jumped on Tuesday as the infrastructure engineer reported a strong set of first-half results.
Revenue rose 4% to £313.6mln, of which engineering services grew 4% to £293.1mln and saw adjusted operating profit increase 7% to £20.5mln.
Engineering services, which is focused on rail, infrastructure, energy and environmental markets, are generally high-volume, non-discretionary maintenance and renewals tasks.
As the average task size is comparatively small, the company says this minimises financial and contractual risk compared with those businesses delivering larger schemes.
Specialist Building, the arm focused on the residential and scientific markets in the South East, reported revenue up 5% to £20.5mln and profit up to £0.4mln from £0.3mln, with high-end residential works having largely stopped but the division’s largest project seeing no disruption.
Renew said roughly 80% of group activities have continued during the crisis, with chairman David Forbes saying that following the government's coronavirus reopening statements this month, the business was “addressing immediate opportunities to remobilise” the remaining 20% of its operations and we anticipate this positive momentum will continue.
He added: “Our strong trading performance and cash generation in the first half of the year, is reflective of the reliable long-term nature of the UK infrastructure markets in which we operate, a strategy reinforced in the government's latest Budget when they committed to investing £640bn in infrastructure over the next five years.”
Analysts at broker Liberum said the balance sheet was better than expected, noted the order book has increased from £651mln to £690mln over the second quarter and said "strong cash generation restores our faith in the model", upgrading its model from 'sell' to 'hold'.
Renew shares were up 14% on Tuesday morning to 478p, cutting the fall since the start of the year to 15%.
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