REG - Severfield PLC - Trading Statement

SeverfieldAnnouncement

27/03/2023 07:00

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RNS Number : 2291U  Severfield PLC  27 March 2023

27 March 2023

 

Severfield plc

('the Company' or 'the Group')

Trading Update and Capital Markets Event

 

Severfield plc, the market-leading structural steel group, today issues the
following trading update for the year ended 25 March 2023, ahead of holding
its Capital Markets Event for analysts and shareholders later today and the
announcement of its annual financial results on Wednesday 14 June.

 

FY23 results

The Group is pleased to report that performance in the second half of the 2023
financial year has been strong and we expect to deliver a full year result in
line with our previous expectations.

 

Operational and trading update

UK and Europe

In the second half of the year, we continued to secure a significant value of
high-quality work, resulting in a record UK and Europe order book of £508m at
1 March 2023 (1 November 2022: £464m), of which £391m 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, 93 per cent of the order book represents projects in the
UK, with the remaining 7 per cent representing projects for delivery in Europe
and the Republic of Ireland.

 

We are encouraged by the current level of tendering and pipeline activity
across the Group, seeing a consistently high level of opportunities both in
the UK and in continental Europe, as many of our chosen markets continue to
have a favourable outlook. In our Commercial and Industrial division, we
remain well positioned to take advantage of many opportunities, including
battery plants, data centres, TV and film studios, commercial offices and
stadia and leisure projects. In our Nuclear and Infrastructure division, we
are also seeing a healthy pipeline of opportunities including in the nuclear
sector, where we have recently been selected as one of two 'key delivery
partners' to deliver structural steelwork at Sellafield as part of the
long-term Programme and Project Partners framework.

 

India

The Indian joint venture ('JSSL') has performed in line with expectations in
the second half of the year. JSSL is continuing to ramp up its Bellary
facility towards its maximum capacity of c.100,000 tonnes, with total output
for 2023 including sub-contracted work likely to exceed 100,000 tonnes.

 

Notwithstanding some current market pressures in India, JSSL has continued to
win new work, resulting in a strong order book of £146m at 1 March 2023 (1
November 2022: £143m). In terms of mix, 50 per cent of the order book
represents higher margin commercial work, with the remaining 50 per cent
representing industrial projects, mainly for JSW, our joint venture partner.
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 economy
which is expected to grow significantly in the medium term.

 

In conjunction with JSW, we are in final negotiations to secure a plot of land
in India to facilitate the future expansion of the business. The land purchase
will allow the business to expand its geographical footprint whilst providing
it with the platform to expand quickly and add the necessary volume to support
the expected future market growth.

 

Acquisition of Voortman Steel Construction Holding

On 15 March 2023, the Group announced that it has entered into an agreement to
acquire 100% of the share capital of Voortman Steel Construction Holding B.V.
('VSCH'), an innovative European steel construction group, for a net
consideration of €24m payable in cash on completion. Unchanged from this
earlier announcement, the acquisition is expected to complete on the later of
either 3 April or satisfactory completion of the works council consultation
process, as required under Dutch Law.

 

Capital Markets Event

The Capital Markets Event will focus on the benefits of the Group's new
divisional structure, opportunities for expansion in Europe (including the
acquisition of VSCH) and Project Horizon, our digital transformation
programme. The event is being hosted by Chief Executive Officer, Alan Dunsmore
and Chief Financial Officer, Adam Semple and will include presentations and
activities with Managing Directors from our business units and other senior
colleagues. The event presentation will be made available on Severfield's
website.

 

Outlook

The Group's businesses are well-positioned in markets with excellent long-term
growth opportunities, underpinned by our new, simplified divisional structure.
Whilst we remain mindful of the macro-economic backdrop, given the Group's
historical performance and the current visibility of forward workload for
delivery in the 2024 financial year and beyond, we look to the future with
confidence.

 

 

 

For further information, please contact:

 

Severfield                                 Alan
Dunsmore
01845 577 896

Chief Executive Officer

 

Adam
Semple
01845 577 896

Chief Financial Officer

 

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 trading update:

Except as otherwise stated '2023' refers to the 52-week period ended 25 March
2023 and '2024' refers to the 53- week period ending 30 March 2024. The
Group's accounts are made up to an appropriate weekend date around 31 March
each year.

 

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.130,000 tonnes of
steel per annum. The Group has six sites, c.1,700 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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