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Severfield sees “stable market” for UK steel despite Brexit uncertainty

A pipeline of private orders for commercial, industrial and data centre projects is expected to be supported by upcoming major UK government projects
building site steel construction
Severfield expanded its shareholder payout thanks to a “strong cash performance”

Steel group Severfield Plc (LON:SFR) said it continues to see a stable market in the UK despite the uncertainties of Brexit, forecasting modest economic growth and a ‘good’ pipeline of potential future orders.

Severfield, in its full year financial results statement, highlighted a number of significant projects in the coming months for key business areas such as commercial offices, industrial, data centres and infrastructure.

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It noted the strength of the market for data centres and industrial orders particularly. In this area, it noted the December award of a £50mln project for Google which will see it supply 15,000 tonnes of structural steelwork for a new eleven storey head office building.

In the twelve months ended March 31, the group participated in over 100 projects including Tottenham Hotspur FC’s new stadium, the installation of the retractable roof for Wimbledon No.1 Court and a new commercial tower at 22 Bishopsgate.

Severfield said it has a UK order book of £237mln, as at 1 June 2018.

The company also looked further ahead, to UK Government projects in the transport sector, where it sees a pipeline of major projects – including HS2 stations and bridges, a potential expansion of Heathrow airport and ongoing investment into Network Rail and Highways England. Severfield believes it is well positioned to win contracts tied to such projects, which have significant steel content.

In terms of its financial results, the company reported a 5% increase in revenue to £274.2mln for the year. Underlying profit increased 19% to £23.5mln, while the reported profit before tax was stated at £22.2mln, up from £18.1mln in the preceding year.

Severfield highlighted a “strong cash performance” resulting in year-end net funds of £33mln, after a £5.5mln equity investment in an Indian joint venture.

It has increased its total dividend for the year by 13%, with a proposed final dividend of 1.7p per share taking the annual dividend to 2.6p, and an additional special 1.7p dividend is propsed which will deliver an overall payout to 4.3p per share.

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