Steel specialist Billington is considering acquisitions after reporting large increases in profits and cash.
In its half year results to 30 June 2014, the group said its revenues rose 35 per cent to £23.2m and pre-tax profits more than tripled to £766,000 compared to the same period a year earlier. Its net cash increased to £2.8m from £417,000.
Trevor Taylor, the firm’s chief financial officer, said the company could invest in machinery for its Barnsley steel structures plant or acquisitions. He said: “We are busy assessing how best to put the cash we have now and in the near term to best use and that is both in kit for our facility in Barnsley and looking at potential acquisitions targets also. There is nothing concrete; it is very much at early stages for both.”
He said any acquisitions would be “ancillary products or services so we can offer a wider package to our customers, but exactly what that would look like we don’t yet know.”
The company is considering paying a dividend to its shareholders for the first time since 2009 when the full-year 2014 results are announced in March 2014. But the decision depends on the cash requirements of the business as it grows and plans for buying new equipment.
The company’s broker, WH Ireland, raised its forecast for the firm’s pre-tax profit by 25 per cent for the full year 2014 to £1.5m and to £1.8m for 2015, which is a 20 per cent rise on its previous estimates.
Billington’s new chief operating officer Mark Smith, who joined from William Hare four months ago, said: “There has been an increase and we have seen work in pretty much all sectors.” He said the firm has seen commercial sector work across the country and an upturn in enquiries and work in the industrial market, largely for speculative warehousing. He added that the company has won some data centre projects. “We have our best order book for five years,” he said. He added that the firm expects stable steel costs for the next quarter.
Mr Taylor said Billington’s period of restructuring was largely complete. This included changes at its Peter Marshall Steel Stairs business, which it bought out of administration in 2011. The bulk of the £27,000 of redundancy costs in the half year, down from £88,000 in the same period a year earlier, were in the steel stairs business.
Mr Taylor said: “They [Peter Marshall] are seeing the upturn in enquiries and orders that Billington was starting to see 6 to 9 months ago so life looks a bit rosier. It is the first time there has been a black number on the bottom line so the effort we have put in [to change the business] is transferring into the numbers.”
While Peter Marshall’s products are installed towards the end of construction, Billington’s safety barriers and hoardings get used at the start of the cycle and so have had more opportunity to benefit from an increase in projects.
The firm has developed new barriers for timber and concrete frame structures which has resulted in more work in the last year. Mr Taylor noted that the popularity of timber frame in public projects and in some private schemes like supermarkets, was boosting demand for the product.
Billington’s joint venture with Bourne Construction, BS2, is bidding for several projects. It specialises in very large multi storey projects. Mr Taylor said: “Now a number of high rise schemes are starting to come back on line it has presented BS2 with increased opportunities.”