Last checked at 1 Sep 2021 07:00
1 September 2021
Severfield plc
('the Company' or 'the Group')
AGM trading update
UK and Europe order book at record levels
Ahead of today's Annual General Meeting ('AGM'), Severfield plc, the market leading structural steel group, announces the following trading update for the financial year ending 31 March 2022.
Current trading and outlook
The Group is pleased to report that trading in the first five months of the 2022 financial year has continued to be positive and is in line with management's expectations. The Group's financial position remains good, albeit the recent steel and other input price rises are impacting working capital in the short term, and the outlook for the year ending 31 March 2022 is unchanged. As anticipated, profits for the 2022 financial year are likely to have a second half bias (the profit weighting for H1 / H2 is expected to be approximately one third / two thirds), with several ongoing contracts expected to deliver higher profits in the second half of the year.
UK and Europe
The UK and Europe order book at 1 September includes a significant amount of new work which we have secured over recent months and now stands at a new record level of £376m (1 June 2021: £301m), of which £291m is for delivery over the next 12 months. This leaves the Group very well-positioned with a strong future workload for the remainder of the 2022 financial year and beyond.
The growth in the order book has been driven by several significant project wins including the new stadium for Everton F.C., two large and various smaller distribution facilities in the UK, reflecting a sector which continues to remain buoyant, new HS2 bridge packages and other bridge awards reflecting investment in infrastructure by Highways England and Network Rail. The order book remains well-balanced, showcasing the benefits of our strategic diversification over recent years, and contains a healthy mix of projects across the Group's key market sectors. In terms of geographical spread, of the order book of £376m, 90 per cent represents projects in the UK, with the remaining 10 per cent representing projects for delivery in Europe and the Republic of Ireland (1 June 2021: 84 per cent in the UK, 16 per cent in Europe and the Republic of Ireland).
We continue to be very encouraged by the current level of tendering and pipeline activity across the Group. We remain well-positioned to take advantage of further significant opportunities, including in the industrial and distribution, transport infrastructure, commercial office (including in London), nuclear and data centre sectors, providing us with extra resilience and the ability to drive future profitable growth.
India
The Indian joint venture ('JSSL') has continued its recovery from the effects of the second wave of COVID-19. The factory in Bellary and all the business's construction sites are currently operational. After a difficult start to the first half, when output was disrupted, the company is expected to maintain a largely break-even profit position in H1, reflecting an Indian market which is now showing signs of improvement. Despite the recent COVID-19 challenges, JSSL's clients have continued to place orders, resulting in a strong order book of £135m (1 June 2021: £140m). In terms of mix, 60 per cent of the order book represents higher margin commercial work, with the remaining 40 per cent representing industrial projects, mainly for JSW (1 June 2021: commercial work of 68 per cent, industrial work of 32 per cent).
JSSL's pipeline of potential orders continues to include several commercial projects for key developers and clients with whom it has established strong relationships, including in the commercial office, data centre and healthcare sectors. This, together with JSSL's healthy order book, reflects a continuing strong underlying demand for structural steel in India, leaving the business very well-positioned as the market continues its recovery from the second wave of COVID-19.
Carbon neutral accreditation
Operating in a sustainable manner is crucial to both the current and future success of the Group. In line with our sustainability strategy, we are delighted to announce that in August 2021, we achieved our current year target to be accredited as carbon neutral for our manufacturing and construction operations by the Carbon Trust, in accordance with PAS 2060, the only recognised international standard for carbon neutrality. This is an important milestone in our journey towards Net Zero.
Carbon neutral in this context means that we use carbon offsetting to eliminate our combined scope 1, scope 2 and operational scope 3 (business travel, transport and distribution, employee commuting, and waste) greenhouse gas emissions.
Half year results
The Group will announce its financial results for the half year ending 30 September 2021 on Tuesday 23 November 2021.
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
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).