Shares in engineering services firm Renew Holdings (RNWH:AIM) leapt 15% to 482p on Tuesday after it posted record first half results thanks to strong demand in its core businesses.
With over three quarters of its activities deemed ‘critical’ to the economy, the firm has continued to operate with minimal disruption in key areas such as rail, road, water and energy infrastructure.
RECORD TRADING
In the six months to 31 March, group revenues rose 4.2% to £313.6m while adjusted operating profits rose 8.2% to £19.9m, lifting the margin from 6.1% to 6.4%.
As chairman David Forbes observed, the first half performance was ‘reflective of the reliable long-term nature of the UK infrastructure markets in which we operate, a strategy reinforced in the government’s latest budget when they committed to investing £640bn in infrastructure over the next 5 years.’
With committed funding for critical national infrastructure, and high barriers to entry in its business due to the complexity of the work involved, the firm could be said to be ‘having a good crisis.’
SHOWING RESILIENCE
In the rail infrastructure market, Renew provides maintenance, support and renewal services to Network Rail, which in the current five-year investment cycle is spending £48bn on the network.
While there were limited site closures in March when lockdown was imposed, Network Rail has pressed ahead with its planned works and in the last month and a half activity levels have been similar to those before the crisis.
Renew also undertook vital safety work on the railways after storms Ciara and Dennis battered the network in February, diverting teams from less essential projects.
Similarly, in the water sector the firm was able to carry out critical work on top of its planned maintenance and renewal works to keep the network operational.
The budget for the latest five year asset management plan is on a par with the rail network at £50bn, with flood alleviation and coastal protection systems becoming increasingly important alongside the core clean and wastewater operations.
ROADWORKS AHEAD
The third leg of Renew’s strategy is road infrastructure, where it is gaining a greater volume of work since the acquisition of Carnell in January.
The government has earmarked £27.5bn for its latest five year road investment strategy, with Carnell winning firm additional contracts from Highways England.
Chief executive Paul Scott is pleased with the integration of Carnell and the push into road infrastructure. ‘We remain operational across all areas for Highways England which is reflective of the resilience of this new market sector for Renew. During April and May, we have experienced similar levels of activity to those seen prior to the pandemic’s impact.’
