Last checked at 27 Mar 2023 07:00
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).