Hills Industries Limited (ASX: "HIL") is well positioned to take advantage of any improved economic conditions during 2010-2011 and remains "cautiously optimistic" of achieving a higher full-year profit, the Company?s Chairman, Ms Jennifer Hill-Ling, told today?s annual general meeting in Adelaide.

Shareholders at today's AGM also overwhelmingly voted in favour of a change in the Company's name to Hills Holdings Limited which Ms Hill-Ling said reflected the transition of the Hills Group from an industrial company which owns the "Hills Hoist" to an investor in, and operator of, a variety of businesses.

Ms Hill-Ling said the markets in which Hills operates continued to experience volatility and uncertainty and while the Australian economy continued to outperform other developed nations, Hills remained cautious about the year ahead.

She said positive domestic signs - including improvements in employment and consumer - confidence were tempered by:

• concerns about increases in interest rates, 
• a high Australian dollar
• weak  economic conditions in Europe and the US;
• the impact of the withdrawal of the Federal government?s stimulus package; and
• fears that China?s growth may slow.

"Our Electronics and Communications Segment and Lifestyle and Sustainability Sector both recorded solid results in the first quarter of this year. However our Building and Industrial Segment felt the impact of the subdued construction market, de-stocking by a number of our customers and increased competition from imports," Ms Hill-Ling told the meeting.

"Last year was very much a story of two halves, and you will recall that our profit in the first half of the past financial year was substantially higher than in the second half."

"We are anticipating the opposite trend in this current financial year and whilst we expect that the net profit for the first half of F2011 will be around 10% higher than the second half of F2010, we anticipate that it will be around 10% below the corresponding period last year and given the extra shares on issue, our earnings per share to be around 15% lower."

"We remain cautiously optimistic about the future performance of the Hills Group and continue to forecast a modest improvement for the full year, however, results will largely be driven by the level of activity in commercial building and construction and the rate of increase in project work in the electronics and healthcare sectors."

"Well positioned"

Ms Hill-Ling said the group?s implementation of recent restructuring initiatives and with further operational improvements in place, Hills was well positioned to take advantage of any improved economic conditions during the coming year.

"The net cash received during the past financial year from the increase in contributed equity was used to repay borrowings and buttressed the company against the risks posed by the extreme global economic uncertainty at that time," she said.

"We are positioned to capitalise on growth opportunities that arise while maintaining low levels of debt. Hills? net debt at 30 June 2010 was $50.2 million compared with $154.4 million a year earlier at June 30 2009. Our gearing (measured as net debt divided by shareholders? equity) at the end of the past financial year was down significantly at 10.1%."

"We have adequate bank facilities in place and we are well within our banking covenants. Our bank facilities with our major lenders are locked in until November 2012. "

"Reviewing acquisition opportunities"

Ms Hill-Ling said the Electronic Security and Entertainment business continued to be the largest contributor to the profit of the Hills Group and in the past financial year achieved a record level of revenue - increasing by 4% to $349.5 million - and a 5.4% rise in operating earnings before interest and tax to 32.5million.

"We continue to view this segment as critical to the growth of the Hills Group and we are currently reviewing a number of acquisition opportunities which should see a further increase in revenue and profits in the medium term," she said.

"Given the diverse nature and breadth of the businesses in this segment, and to more accurately describe the products and services that we deliver, we intend to rename this division "Electronics and Communications" following today's meeting."

The strategy going forward for the Building and Industrial Products division - which has the largest revenue with the Hills Group ? was to continue to develop and add new products to the current range, and to further expand its geographical footprint.

Meanwhile, Ms Hill-Ling said the strategy for the Home Hardware and Eco division this year and in the medium term would be to:- develop and release new products in all businesses; broaden the distribution network; and to extend the segment's presence in the Solar industry. 

"Given the diverse nature and breadth of the businesses in this segment and to more accurately describe the products and services which we deliver, we intend to rename it the "Lifestyle and Sustainability" segment following today's meeting," she said.