REG - Severfield PLC - Pre-close trading update

SeverfieldAnnouncement

24/04/2025 07:02

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RNS Number : 9230F  Severfield PLC  24 April 2025

24 April 2025

Severfield plc

('the Company' or 'the Group')

Pre-close trading update

 

Severfield plc, the market leading structural steel group, today issues the
following trading update for the year ended 29 March 2025. The Group will
confirm the announcement date for the FY25 results in due course.

 

FY25 results

The Group expects FY25 underlying profit before tax to be in the range of
£18m - £20m, in line with our expectations which were established at the
time of the trading update on 3 March.

 

Net debt (pre-IFRS 16 basis) at 29 March was £44m, which is better than
expectations. Net debt represented RCF drawings of £30m and amortising term
loans of £14m, providing year-end facility headroom of c.£30m.

 

Operational update

We continue to take appropriate cost reduction actions to mitigate the effects
of the trading pressures the Group is currently facing. We have recently
completed a headcount review which will result in a reduction in Group
headcount of c.6% through a combination of redundancies and the
non-recruitment of approved vacancies. In addition, there is an even stronger
than normal focus on cash generation and conservation. This includes careful
working capital management, the acceleration of certain tax refunds from HMRC,
a reduction in planned capital expenditure, taking into account the
significant investment in the asset base over recent years, and other ongoing
cost reduction actions.

 

Secured workload

The UK and Europe order book remains solid and stands at £440m at 1 April (1
February: £403m), of which £327m (1 February: £281m) is for delivery over
the next 12 months. The order book remains well-diversified and contains a
good mix of projects across the Group's key market sectors including in
Europe, with 20 per cent of the order book representing projects in
continental Europe and Ireland (1 February: 21 per cent).

 

The Indian order book of £210m at 1 April (1 November: £197m) is at record
levels and contains a good mix of higher margin commercial work of 79 per cent
(1 November: 77 per cent). This order book reflects a construction sector in
India which continues to grow strongly, together with the increased use of
steel as a construction material.

 

Bridge remedial works programme

The bridge remedial works programme is progressing as expected and, whilst the
balance of cost and associated recoveries continues to evolve over time, our
overall view of testing and remedial costs net of insurance proceeds is
broadly unchanged, at an estimated non-underlying net cost of c.£20m. The
Group has incurred testing and remedial cash costs of c.£18m in FY25 and the
remaining cash costs are expected to be incurred in FY26 and FY27. Discussions
with the Group's professional indemnity ('PI') insurers have made good
progress and they have now confirmed coverage. The insurers have also
indicated that they will make an interim payment by mid-June, following the
completion of a quantum verification exercise with their loss adjusters. A
further update will be provided at the time of the FY25 results announcement.

 

Outlook

Whilst we continue to see a good pipeline of project opportunities, the market
backdrop in the UK and Europe remains challenging, with pricing remaining at
tighter levels for longer than expected in a competitive market and some
projects not being awarded or progressing within normal timescales, all of
which is consistent with the current lower level of business confidence in the
UK economy as a whole. As such, our expectations for FY26 are unchanged from
those communicated at the time of the trading update on 3 March.

 

Looking further ahead, we have already secured some attractive large projects
for FY27, and we are also seeing significant future opportunities in sectors
such as manufacturing (industrial), commercial offices, including the
emergence of several planned large developments in London, and data centres,
driven by Artificial Intelligence ('AI') applications which are driving even
greater dependence on data centre infrastructure. Our businesses also remain
well positioned to win work in other 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 Capital           Nicholas
How
020 3100 2000

 

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

Ginny Pulbrook                                     020 3757
4980

Tom Huddart
 
020 3757 4980

 

 

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.1,800 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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