Hewden Stuart 35% ahead: Recovery in construction industry will be slow, company warns

HEWDEN STUART, Britain's biggest independent plant hire company, yesterday announced a 35 per cent increase in first-half profits but warned that recovery in the construction industry would be slow.

Sir Matthew Goodwin, chairman, said: 'I cannot see in a low- inflation environment that house prices will leap ahead. The industry will remain competitive for years to come and we will never return to the days of 1989.'

Despite flat trading, Sir Matthew said Hewden had decided to modernise and expand its depots. He expected construction companies to shy away from buying plant in the face of an uncertain upturn, benefiting hire businesses.

That trend would be encouraged by a reduction in the number of finance companies prepared to fund the acquisition of equipment. The increasing gap between the value of ageing plant and the cost of replacing it would also encourage hiring rather than outright purchase.

Hewden said there had been no improvement in prices during the half but profits, which had started to show a year-on-year recovery in April, were on an upward trend.

At the end of July, Hewden Stuart confirmed its confidence in the sector's improving fortunes by acquiring 24,000 items of plant from BET. Sir Matthew said that he expected the BET business to make a contribution to profits in the second half.

In the six months to July pre-tax profits increased from pounds 6.73m to pounds 9.1m. Sales were 3 per cent higher at pounds 91.7m, earnings per share rose from 2.4p to 3.6p and the interim dividend emerged 3 per cent higher at 0.9p.

Although profits have fallen from a peak of pounds 36m in 1990 to pounds 12m last year, Hewden is unusual in the plant hire industry for having come through the recession without recording a loss.

Shareholders, who have seen a pounds 1,000 investment at the company's flotation in 1968 grow to more than pounds 30,000, will receive one bonus share for every five held in an anniversary scrip issue. The shares closed yesterday at 158p, up 16p.