Redhall

Engineering support services specialist Redhall delivered a 63% surge in first half profits, driven by growth in the resilient energy and defence sectors.

Led by CEO David Jackson, Redhall grew pre-tax profits to £3.1m (2008: £1.9m) in the six months to March, on sales up 56% at £64.8m, reflecting both acquisitive development (including a first time, five month contribution from October’s Chieftain acquisition) as well as healthy organic growth.

Covering its manufacturing and engineering site services across the civil nuclear, oil and gas and power markets, the energy division delivered a 49% profits surge to £2.1m. In defence, sales surged 175% higher to £13.1m and profits moved 84% north to £855,000, driven by Chieftain as well as an improved performance at weapons facility AWE Aldermaston in Berkshire.

A degree of recessionary pain was felt however, in the process sector, covering the company’s food and chemical engineering activities and accounting for a third of revenue. Though the branded food sector remained resilient, the chemical sector suffered from a drop off in consumer demand.

Closing the half with £5.1m net cash in its coffers and an expanded £110m order book, Redhall remains exceptionally well placed for long-term growth given its presence in robust, regulation-driven end markets and long-term links with clients.

For the year, broker Altium Securities forecasts increased pre-tax profits of £6.8m (2008: £4.6m), earnings of 16.5p (2008: 15.2p) and a 4.4p dividend. Though the shares, enthusiastically backed here at 248.5p, have fallen back, they continue to represent terrific long-term value. Buy/Hold.