REG - Severfield PLC - Trading Update

SeverfieldAnnouncement

03/03/2025 07:15

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RNS Number : 9840Y  Severfield PLC  03 March 2025

3 March 2025

Severfield plc

('the Company' or 'the Group')

Trading update

 

Severfield plc, the market-leading structural steel group, announces the
following trading update for the year ending 29 March 2025.

 

FY25 trading

In our interim results announcement on 26 November 2024, we highlighted that
the market backdrop in the UK and Europe was challenging. Since then, market
conditions have shown no signs of improvement, with pricing remaining at
tighter levels for longer than expected in a competitive market and project
opportunities continuing to be either cancelled or delayed. This includes a
large project for which production was expected to commence in January and
which has been recently delayed until early FY26. The UK and Europe order book
at 1 February 2025, excluding this large project for which the full order has
yet to be received, was £403m, of which £281m is for delivery over the next
12 months (1 November 2024: £410m, of which £307m was for delivery over the
next 12 months).

 

Whilst the Group has sought to mitigate the effects of these prevailing market
conditions through new project awards, our normal contract execution
improvements and cost reductions, as well as the cancellation of the share
buyback programme, it has not been possible to secure sufficient work in the
short term to fully offset the non-recovery of factory overheads in Q4. This,
together with a revised contract judgement to reflect changes on a long-term
nuclear project originally tendered in 2019, means that the Group now expects
underlying profit before tax for the full year to be in the range of £18m -
£20m.

 

Net debt (pre-IFRS 16 basis) at 31 January was £55m. This represented RCF
drawings of £40m and outstanding acquisition-related loans of £15m. The net
debt position (pre-IFRS 16 basis) for the full year is expected to be in the
range of £45m - £50m, providing cash headroom of £25m - £30m, in line with
the Group's expectations.

 

The bridge remedial works programme is progressing as expected and our view of
testing and remedial costs and insurance recoveries is broadly unchanged, with
more clarity expected in the coming weeks as discussions with affected
clients, relevant industry authorities, insurers and other stakeholders
progress.

 

Outlook

Whilst we continue to see a good pipeline of project opportunities, client
decision-making continues to be deferred and projects are not being awarded or
progressing within normal timescales, consistent with the current lower level
of business confidence in the UK economy as a whole. This, in tandem with the
absence of large 'anchor' projects in the order book and a general market
backdrop which is not expected to improve in the short-term, is having a
consequential impact on FY26. As noted above, the Group is seeking to mitigate
the ongoing impact of these market conditions through ongoing cost reduction
actions. As such, underlying profit before tax for FY26 is now expected to be
below our revised expectations for FY25.

 

Looking further ahead, we have already secured some attractive large projects
for FY27, and we are also seeing future large opportunities in sectors such as
data centres, manufacturing (industrial) and commercial offices, including the
emergence of several planned large developments in London. Our businesses also
remain well positioned to win work in markets with positive long term growth
trends including those which are driving the green energy transition. Our
prospects across these markets provide the board with confidence that the
Group will deliver attractive shareholder returns in the future and our medium
term growth targets remain unchanged.

 

For further information, please contact:

 

Severfield                                 Alan Dunsmore
                                  01845 577 896

                                                 Chief Executive Officer

 

Adam Semple                                      01845 577
896

Chief Financial Officer

 

Jefferies International               Will Soutar
                                    020 7029 8000

 

Panmure Liberum                     Nicholas How
                             020 3100 2000

 

Camarco
severfield@camarco.co.uk (mailto:severfield@camarco.co.uk)

Ginny Pulbrook                                     07961 315
138

Tom Huddart
 
07967 521 573

 

Notes

Except as otherwise stated '2025 and FY25', '2026 and FY26' and '2027 and
FY27' refer to the 52-week periods ending 29 March 2025, 28 March 2026 and 27
March 2027. 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.150,000 tonnes of
steel per annum. The Group has seven sites, c.1,900 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).

 

Inside information

This announcement contains inside information as stipulated under the Market
Abuse Regulation (EU) No.596/2014 (as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018) and is disclosed in
accordance with the Company's obligations under Article 17 of those
Regulations. On the publication of this announcement via a Regulatory
Information Service, such information is now considered to be in the public
domain. The person responsible for arranging for the release of this
announcement on behalf of Severfield is Adam Semple, Chief Financial Officer.

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