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Project delays hit Hill & Smith profit, shares drop 20 percent

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(Reuters) – Infrastructure products maker Hill & Smith Holdings Plc <HILS.L> posted a double-digit drop in half-year core earnings on Wednesday, hit by project delays in the UK’s roads programme and utilities market, pushing its shares down as much as 20 percent.

Hill & Smith said that while it expects the performance for the rest of 2018 to be more in line with its expectations, it does not expect to recover the shortfall in the first half.

The company, which makes road safety barriers, street signs and street lighting columns, said delays in the start of new Smart motorway projects in the UK have hurt its business.

The UK business had certain headwinds – specifically bad weather in the first quarter, short-term delays to some road projects, and a more cautious UK investment environment, Chief Executive Officer Derek Muir said in a statement.

Construction and related firms have been faced with uncertainty in the UK underlined by investment fears stemming from the country’s decision to leave the European Union.

The company said profit before tax fell to 33 million pounds, for the six months ended June 30, from 37.4 million pounds in the year-earlier period.

But revenue edged slightly higher to 295.4 million pounds from 291.8 million pounds, as significant investment in older infrastructure in overseas markets such as the United States drove demand and countered weakness in Britain.

The company, which also provides zinc and other coating services for fencing and bridges, said raw material input costs in the UK and U.S., particularly zinc commodity prices, have been volatile and have hit operating margins.

Shares of the UK-based company, which were down 18.4 percent at 0703 GMT on the London Stock Exchange, were the biggest drag on the FTSE Midcap Index <.FTMC>.

(Reporting by Muvija M in Bengaluru; Editing by Bernard Orr)

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