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Steel contractor Billington's profit plunges 58%

14 Sep 10 Billington has experienced a 58% fall in profit for the first half of 2010.

Billington has experienced a 58% fall in profit for the first half of 2010.

The steel contractor's pre-tax profit for the period was £1.1m, compared to £2.6m for the first half of 2009.

Revenue was down by 28% at £21.3m (H1 2009: £29.7m).

Billington cash position worsened slightly, from £8.6m to £6.9m.

However, it has all but wiped out the £5.2m pension deficit, which now stands at £200,000, thanks in part to disposal of “non-core operations”.

Dosco Overseas Engineering and its subsidiary Hollybank Engineering were sold in May for £290,000, though they made a loss during the period of £300,000.

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Worryingly, chief executive Steve Fareham said: “The profits shown in this period are supported by the positive results from contracts which were won in 2009 at higher margins than are currently being generated.

“The company has been successful in winning a reasonable number of new contracts in the retail sector, and this along with other contracts helped restore production activity levels in recent months. However, the ongoing uncertain market conditions continue to impact on margins.”

A subsidiary of Billington is Easi-edge, which provides safety barriers to the UK steel and concrete frame construction industry, and has a “small but ever growing market share”. It has also successfully launched a site hoarding system, 'Hoard-it', which has grown sufficiently to necessitate a move to additional premises in Barnsley.

Looking ahead, Fareham said: “Prospects for the sectors in which the Group operate remain challenging for the foreseeable future. The number and value of contracts being awarded remains well below that of recent years and as a result new work is only won on very competitive terms.

“We expect that this will continue to have an adverse effect on our margins and working capital in 2010 and 2011. The overall result for 2010 is likely to be in line with expectations, with the results for the second six months benefiting from a positive contribution from the final completion of contracts won in 2009.”

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