Special surprise from Billington

AIM-quoted structural steels supplier Billington (LON: BILN) surprised the market with a special dividend of 13p/share on top of the normal dividend of 20p/share for 2023. The structural steel supplier had a particularly strong 2023 and although profitability will not be maintained this year it should still be well above the level in 2022.

In 2023, revenues grew 53% to £132.5m, while pre-tax profit jumped 130% to £13.4m. Lower steel prices boosted profit. Net cash is £22.1m, so the dividend will not make much of a dent in that cash pile.

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All parts of the group were profitable, although Easi-Edge did find the weak construction sector conditions particularly tough. That means that the profit contribution from the safety solutions division was lower. The improved profit came from the structural steels division. The coatings business acquired in 2022 did better than expected and moved into profit.

Cavendish has raised its 2024 pre-tax profit expectations from £8m to £8.5m reflecting the exceptionally strong year in 2023 and the tough construction market. The forecast revenues of £125m are already well underpinned by the order book. A maintained normal dividend of 20p/share would be 2.6 times covered by earnings and net cash should remain at around £22m even after the special dividend.

Billington is the main UK rival of Severfield, which is also prospering see article (Severfield – take note of yesterday’s substantial trading in this steelwork group’s shares  – UK Investor Magazine). At 492p, Billington is trading on less than ten times prospective 2024 earnings. Recent contract wins suggest that the market may be improving and Billington is involved in growth sectors, such as data centres.

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