The structural steelwork company made firm trading profit in the year to 31 March 2014, although there were costs involved in cleaning the stables.
Severfield made a pre-tax loss for the year of £2.6m, but underlying operating profit was £7.6m and underlying profit before tax was £4.0m.
This compares to a pre-tax loss of £23.1m for the 15 months to 31 March 2013 (the company has now changed its financial year end).
Restructuring the group involved £8.1m of one-off costs, the largest of which was £2.6m of redundancy costs. The group's largest businesses, Severfield-Rowen Structures and Watson Steel Structures, were merged into Severfield-Watson Structures from January 2013.
Group revenue for the year to 31 March 2014 was £231.3m, compared to £318.3m for the 15 months to £1 March 2013.
Chief executive Ian Lawson, who joined last autumn, 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.”
The Indian joint venture, JSW Severfield Structures Ltd (JSSL), continues to underperform and made a £3m loss for Severfield. India remains primarily a concrete construction market so Severfield invested heavily seeing opportunities for steel. Its plant there has been underused. Derek Randall, executive director, moved to India full time last year to sort it out.
“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,” Mr Lawson said.
Mr Lawson said that problems with UK contracts that had ultimately resulted in the departure of his predecessor Tom Haughey in January 2013 were now just about resolved. These contracts include the Cheesegrater building (122 Leadenhall Street) in London.
Mr Lawson said: “During the year, good progress was made in resolving the main legacy contract issues which were at the core of the operating losses in the previous period. As expected there were challenges in resolving some of these issues but overall the outcome of those legacy contracts has been in line with the board's expectations coming into the year, and the board believes that balance sheet risk relating to these contracts has now been removed.”
Commenting on future UK workload, Mr Lawson said: "The UK order book, at £168m, remains solid and within a range which management is comfortable with, representing approximately eight months of forward production capacity. It has reduced in overall terms over the year from previous levels but this reflects both the capacity reduction arising from the business reorganisation, as well as a longer negotiating period on major contracts arising from our improving risk management processes. The market has been stable during the year but prices have remained competitive and we continue to focus on ensuring that there is a fair balance of risk and reward within the contracts. There are signs that the market will pick up towards the end of 2014 but the current order book does not yet reflect this."