Release Date: April 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Billington Holdings PLC (LSE:BILN, Financial) maintained a strong cash balance of GBP21.7 million and remains debt-free, providing financial stability.
- The company achieved an 8.9% operating profit margin, allowing for a competitive dividend of 25p per share.
- A robust order book is in place, securing productivity for 2025 into 2026, with projects in sectors like power, data, and food processing.
- The company is in the final year of a five-year capital investment program, which has enhanced quality, efficiency, and productivity.
- Billington Holdings PLC (LSE:BILN) has a significant surplus in its final salary pension scheme and is moving towards a buyout, potentially returning surplus to the company.
Negative Points
- Revenue decreased due to declining material costs and increased contract complexity, impacting overall turnover.
- The market environment is challenging, with reduced business confidence and construction contracts being deferred or canceled.
- The company's financial performance is expected to be weighted towards the second half of 2025, indicating potential short-term volatility.
- There is pricing pressure in the market, with competitors discounting stock to maintain utilization, affecting margins.
- The structural steelworks sector contracted in 2024, and while growth is forecasted for 2025, it may not gain momentum until later in the year.
Q & A Highlights
Q: Are you seeing increased opportunities in the bridge work market and what output levels are you targeting?
A: Mark Smith, CEO, stated that they have several opportunities for delivery at the end of 2025, with a strong pipeline into 2026. They aim for a revenue of at least GBP10 million from this new venture in 2026.
Q: Why did the company choose to increase the dividend by 25% rather than pay a special dividend like last year?
A: Trevor Taylor, CFO, explained that the dividend policy is based on a cover of 2.5 to 2.7 times underlying earnings. The current dividend reflects this policy, with a cover of 2.65 times, showing confidence in their secured workload for 2025.
Q: Which government policies are increasing costs in the business?
A: Trevor Taylor noted that the recent increase in employer's National Insurance is expected to add approximately GBP500,000 to the wage bill. Additionally, the rise in minimum wage is putting pressure on wages just above the minimum level.
Q: Are share buybacks or a special dividend under consideration given the depressed share price?
A: Trevor Taylor mentioned that share buybacks remain under review. While there are mixed opinions among shareholders, a buyback is seen as a more permanent use of cash compared to a special dividend.
Q: How do you ensure that you don't have similar issues to Severfield with regard to remediation work?
A: Mark Smith assured that they have not welded any weathering steel on bridges, which was the issue with Severfield. They have conducted thorough examinations of their welding procedures, which have been independently verified with no issues found.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
