Hill & Smith now expects full-year operating profit modestly ahead of previous expectations as double-digit US growth outweighs a challenging UK market.

Hill & Smith (LSE:HILS), the infrastructure products and galvanizing group, has increasingly become a US-focused business. Its half-year results, published on 12 August 2026 and reported in US dollars following a change in reporting currency announced in June, showed solid growth in America offsetting a difficult period in the UK. The FTSE 250 company said it now expects underlying operating profit for 2026 to be modestly ahead of previous expectations.

First-half performance

Revenue for the six months to 30 June rose 8% to $606.7m, or 5% on an organic constant currency basis. Underlying operating profit increased 8% to $102.9m, with the margin steady at 17.0%. Underlying earnings per share rose 9% to 90.6 cents. Statutory operating profit fell 13% to $76.5m, reflecting $26.4m of non-underlying charges, including $13.2m of costs related to restructuring in the UK.

The interim dividend was raised 7% to 25.0 cents, payable on 8 January 2027 to shareholders on the register on 27 November.

A tale of two markets

US Engineered Solutions grew revenue 14% on an organic constant currency basis to $311.6m, with underlying operating profit up 20% to $56.5m. Galvanizing Services also performed well, with revenue up 11% and profit up 18% to $38.7m, lifting its margin to 25.6%. The US now accounts for 66% of group revenue and 84% of underlying operating profit.

The UK & India Engineered Solutions division was weaker, with revenue down 13% and underlying operating profit down 51% to $7.7m. Chief executive Rutger Helbing described UK trading as challenging, as expected, and said the company was taking portfolio and operational actions. In May the group sold its UK permanent steel road barrier business for $7.1m.

Hill & Smith (LSE:HILS) completed the acquisitions of Freeberg and Hentech for a combined $45.8m, and Helbing said both had performed well. Net debt rose to $170.9m from $68.7m at the end of 2025, reflecting acquisitions, buybacks and weaker cash conversion of 50%, which the company expects to improve in the second half. Covenant leverage remained low at 0.4 times, with interest cover of 26.1 times and liquidity headroom of $341.4m. Free cash flow for the half was $30.9m, compared with $66.8m a year earlier, while the long-term target for underlying cash conversion is above 80%. The group had completed £58.6m of its £100m share buyback programme by 10 August, and return on invested capital improved to 26.7%, above its target of more than 22%.

Board changes and outlook

In September the company announced that Sue Clark, who chairs remuneration committees at several FTSE companies, would join the board as a non-executive director on 2 October and become senior independent director from 1 January 2027, succeeding Tony Quinlan, who will remain on the board.

Looking ahead, Hill & Smith expects a small improvement in full-year margins compared with 2025, with profit now expected to come in modestly ahead of the roughly $212m indicated at its May AGM. Revenue from what it calls higher-growth priority end markets rose to 39% of the total, up from 34% in 2025. US infrastructure demand remains the key driver, while UK conditions are expected to stay challenging in the near term. Investors will watch for any further portfolio action in the UK, the improvement in cash conversion and the pace of US growth.