REG - Severfield PLC - Pre-close Trading Update

SeverfieldAnnouncement

20/04/2022 07:00

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RNS Number : 6604I  Severfield PLC  20 April 2022

20 April 2022

Severfield plc

('the Company' or 'the Group')

 

Pre-close trading update

 

Order books at record levels

 

 

Severfield plc, the market leading structural steel group, today issues the
following trading update for the year ended 31 March 2022, ahead of the
announcement of its annual financial results on Wednesday 15 June.

 

 

FY22 expectations

The Group expects to deliver a full year result in line with management's
previous expectations.

 

 

Operational and trading update

 

UK and Europe

In the second half of the year, we have continued to secure a significant
value of new work, resulting in a record UK and Europe order book of £479m at
1 April 2022 (1 November 2021: £393m), of which £382m is for delivery over
the next 12 months. The order book remains well-diversified and contains a
healthy mix of projects across the Group's key market sectors. In terms of
geographical spread, 94 per cent of this order book represents projects in the
UK, with the remaining 6 per cent representing projects for delivery in Europe
and the Republic of Ireland.

 

We continue to be encouraged by the current level of tendering activity across
the Group, both in the UK and in continental Europe, and are well-positioned
to take advantage of some significant opportunities in the industrial and
distribution (battery plants and distribution centres), stadia and leisure,
transport infrastructure, nuclear and data centre sectors.

 

Despite seeing further input cost inflation (including in steel prices) and
some disruption to raw material supplies as a result of Russia's invasion of
Ukraine, we are currently managing these effectively, and steel remains
largely a pass-through cost for the Group.

 

India

The Indian joint venture ('JSSL') has performed profitably and in line with
expectations in the second half of the year. This follows a difficult start to
the year when output was disrupted by the second wave of COVID-19.
Notwithstanding some current inflationary pressures, JSSL has continued to win
new work, resulting in a record order book of £166m at 1 April 2022 (1
November 2021: £140m). In terms of mix, 40 per cent of the order book
represents higher margin commercial work, with the remaining 60 per cent
representing industrial projects, mainly for JSW. This order book, together
with JSSL's improving pipeline of potential orders, reflects a continuing
strong underlying demand for structural steel in India, leaving the business
very well-positioned to take advantage of an improving economy.

 

 

Strong balance sheet and financial position

The financial position of the Group remains good and year-end net debt (on a
pre IFRS 16 basis) was c.£19m, representing an overdraft of c.£4m and
outstanding acquisition loans of c.£15m. Net working capital has increased in
H2 reflecting the impact of steel and other input price rises, together with
higher steel purchases to meet production requirements in early FY23 when
executing our record UK and Europe order book.

 

In December 2021, the Group completed a refinancing of its revolving credit
facility ('RCF'). The new £50m RCF provides additional liquidity above the
£25m RCF which it replaced and extends the term of the facility which now
expires in December 2026. The new facility provides the Group with enhanced
liquidity and long-term financing to help support its growth strategy.

 

 

Outlook

With a record UK and Europe order book of £479m, a very encouraging pipeline
of opportunities, and a well-positioned business in India, the outlook for the
Group remains positive, although we remain mindful of the ongoing effects of
Russia's invasion of Ukraine.

 

 

 

For further information, please contact:

 

Severfield                                    Alan
Dunsmore                                       01845 577
896

Chief Executive Officer

 

Adam Semple                                         01845
577 896

Group Finance Director

 

Jefferies International                 Simon Hardy
                               020 7029 8000

Will Soutar
  020 7029 8000

 

Liberum Capital                           Nicholas How
                                   020 3100 2000

 
Ben Cryer
 020 3100 2000

 

Camarco                                     Ginny Pulbrook
                                      020
3757 4980

Tom Huddart
 020 3757 4980

 

 

 

Notes to editors:

Severfield is the UK's market leader in the design, fabrication and
construction of structural steel, with a total capacity of c.165,000 tonnes of
steel per annum. The Group has six sites, c.1,500 employees and expertise in
large, complex projects across a broad range of sectors. The Group also has an
established presence in the expanding Indian market through its joint venture
partnership with JSW Steel (India's largest steel producer).

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