Is there life after a slump for Adelaide-based manufacturer Hills Industries?

Judging by yesterday's full year result and the market reaction, the answer would have to be yes.

The company's shares had dipped in June and July, falling from a high of $2.40 on June 16 to a low of $2.04 on July 7.

They subsequently struggled higher, but yesterday jumped 11%, or 24c, to $2.43.

The company's earnings took a hit in 2009 after going nowhere for three years, but yesterday the group surprised with a sharp rise in profit and a higher dividend.

Although its previous guidance was for a lift in earnings, profit was at the upper end of the forecast range, the company revealed in yesterday's earnings report for the 2010 financial year.

Hills said net profit before unusual items was 43.3% higher than the $28 million earned in 2009, at $40.188 million, helped by a turnaround in the company's home hardware and eco products division.

That restores earnings to the $40 million range, but leaves it short of the $48 million earned in 2008.

The higher profit was earned on a 3% fall in sales to $1.15 billion from $1.19 billion in 2009.

The company said it would pay a final dividend of 5.5c a share, fully franked, up from 2c in the fiscal 2009.

That made a full year payout of 12.5c a share, up from the 10c in 2009, but a long way short of the 27.5c a share paid in 2008.

Since then the company has changed its payout policy from one of almost 100% of earnings, to a more conservative proportion of a range of 50% to 100%.

The 2010 payout will be 75% of earnings.

The driver was the sharp improvement in the home hardware and eco divisions which saw earnings before interest tax of $10.23 million, up from the loss of $3.1 million in 2009.

That helped offset a lower contribution from Hills' biggest division, building and industrial products, which saw sales dip 4.8%, and EBIT drop 17.3% to $31.8 million in the 2010 year.

Hills chairman Jennifer Hill-Ling said the company forecasts a lift in profits in the current financial year.

"We remain focused on retaining the business improvements implemented in FY09 and FY10 and have a number of growth initiatives in place to deliver a modest improvement in profits for FY11," Ms Hill-Ling said.

Ms Hill-Ling said external factors such as the state of global financial markets, the issue of sovereign debt in Europe, the weak US economy and muted activity in the commercial building sector domestically could have an effect in the forthcoming year.