TIDMSFR
RNS Number : 2878K
Severfield PLC
01 September 2021
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 GBP376m (1 June
2021: GBP301m), of which GBP291m 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 GBP376m, 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 GBP135m (1 June 2021: GBP140m).
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).
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