Billington upgrading 2022 forecasts with confidence and visibility (LON:BILN)

Billington Holdings

Billington Holdings plc (LON:BILN) Chief Executive Officer Mark Smith and Chief Financial Officer Trevor Taylor caught up with DirectorsTalk to discuss highlights from H1, market conditions, what sectors are seeing the strongest demand and the outlook for the company going forward.

Q1: Trevor, you’ve announced your interim results this morning. Could you just talk us through the highlights of the first half?

A1: Pleasingly, revenues increased 22% relative to same period in 2021, and at a level comparable with 2019, the last period before trading was impacted by the pandemic.

More pleasingly, EBITDA and Profit before Tax has also increased comparable with the level of turnover, with EBITDA being 5.1% of turnover, increasing 36% from the same period in 2021. Profit before tax on a statutory basis is at £1.3 million for a half year, forecast to be £3.6 million for the full year, upgrading forecasts from the period prior and gives a measure of the confidence of improved trading in the second half.

Q2: Mark, how have you found the market conditions during the period?

A2: We were still recovering from the effects of the pandemic and the Russia/Ukraine conflict, that’s really reflected in the H1 results. That seems a story of gradual recovery and H2 is now predicted as being far more robust.

So, from that point view, hence the upgrade, we’re looking at delivering a number of projects in more robust sectors and so we are very optimistic about the opportunities that lie ahead and I guess that’s what we’re delivering in these interim results and the upgrade going forward.

Q3: Now, you announced that the group has a strong current order book and has secured significant volume of new work post period end, and also at improved margin levels. What does this mean for the group and in what sectors are you seeing the strongest demand?

A2: Well, we’re underpinned at the moment in, as I say, the robust sectors.

Primarily, we successfully delivered energy from waste project more recently for our principal client Hitachi, and we’ve now got two more projects to deliver them that underpins the order book. We’re in the data centre market so, again, the significant data centre providers, which most people would recognise, and again, we’ve got two very large data centre projects on for delivery at the tail end of ‘22 into ‘23. The good thing is that these projects also have further phases so we’re hopeful that those will then extend that order book further.

The other sector that’s been very strong for us, we have a foothold within delivering film studios so we’re delivering for very large names in film studios at Pinewood and at Shepperton, as well as other new ventures on greenfield sites.

So, those sectors are very, very strong. The results have also been improved because we’ve been bringing in a plan of strategic CapEx expenditure, which has mutated into new machineries, that’s then improving our efficiency and effectiveness as well as production capacity through our Billington Structures and Shafton Steel Services business.

Also, the work that we are securing within those sectors also are adding to the workload of our in-group companies as well. So, Peter Marshall Steel Stairs is benefiting as well as our new start-up company Specialist Protected Coatings, which is going to be providing the services of application of intumescent fire resistant treatments. This business is very exciting for us because it’s the first time we’ve had this facility within our group.

Q4: Just looking forward, how would you describe the outlook for Billington and for the rest of the year and into 2023?

A4: We’ve got visibility to the end of the year because that workload is already secured. We are looking at, I think it’s in indicated on some of our information in the market, an order of magnitude but we’re confident about Q1/Q2 2023 workload. We’re seeing good volumes into that and we’re looking at opportunities then that stretch to Q3/Q4. Some of the projects are in discussion, again, in those sectors, we’ll see the work project into’ 24.

We are conscious of the fact that steel availability and steel price increases, that’s been well publicised, we are managing those impacts. We have good steel supply partners to have a balanced supply and a lot of these costs are passed through and managed by ourselves.

So, as I say, we’re confident with what we see but mindful that we’re still under pressures, but those sectors seem strong. That’s what gives us confidence and visibility to announce the upgrade to the year end at ’22 and then we’re hopeful of going very strongly with a good order book that’s underpinned by a very strong balance sheet and very little debt through into ‘23.

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