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Positive turnaround in Severfield profits
6:29pm Tuesday 3rd June 2014 in Business
STRUCTURAL steel group Severfield said was well placed for future growth as it boasted a significant turnaround in underlying pre-tax profit, following the most turbulent spell in the company’s history.
The North Yorkshire headquartered firm behind some of Britain’s most eye-catching modern landmarks reported profit before tax of £4m, up from a £21.5m loss the year before.
The upbeat annual report followed a major overhaul of the firm’s operations after it miscalculated costs on ten major contracts, including The Shard and Cheesegrater skyscrapers in London leading to losses and the departure of chief executive Tom Haughey.
The firm based at Dalton, near Thirsk, said it expected to see a recovery in demand by the end of 2014, but added it was also looking to diversify into new UK steelwork sectors.
The group, which rebranded this week dropping the Rowen name, also said further restructuring of its Severfield-Watson Structures business was successfully completed.
Performance from Severfield's Indian joint venture, JSW Severfield Structures, was "disappointing" in the year, the company said, with the group's share of losses totalling £3m, while in the previous period the business had achieved close to a breakeven position.
Severfield, which employs about 600 workers in the North said in a statement: “Underlying profit before tax of £4m represented a significant turnaround from the underlying loss of £21.5m in the 15 months to March 31 2013. This reflected both a good recovery in UK operating margins but also a share of losses from our Indian joint venture of £3m.”
Ian Lawson, the company’s chief executive, said: “During the financial year Severfield has achieved substantial operational improvements across the group and delivered a significant turnaround in underlying profit before tax.
“Pleasingly, the group’s ongoing stabilisation and recovery generated increasing UK operating margins supported by a strong balance sheet and solid order book. While our Indian joint venture performed below expectations, actions are being taken to put the business in a sustainable position and we believe the market in India continues to present significant future growth opportunities.
“The development of a clear group strategy in addition to the anticipated recovery in the core UK market means Severfield is well placed for future growth.”
Before its financial woes, Severfield worked on a series of landmark building, including London 2012 Olympic venues, the Emirates Stadium for Arsenal Football Club, Wimbledon's Centre Court roof as well as Heathrow's Terminal Five and Terminal Two developments.
Projects it has worked on during the past 18 months include the Microsoft Data Centre in Amsterdam, the Paris Philharmoni,c and Manchester Victoria Station.