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Fri December 04 2020

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Restructuring costs keep Severfield in the red

26 Nov 13 Structural steel group Severfield-Rowen made another pre-tax loss for the first-half of the year but with restructuring of the UK business complete, there is now light at the end of the tunnel.

However, the company’s Indian operations have now run into trouble and are running at a loss.

For the six months ended 30 September 2013, Severfield-Rowen made a £2.7m pre-tax loss, but with £4.1m of one-off costs being charged, the underlying result was a profit of £1.4m, representing a significant improvement on the £21.1m loss last time.

Group revenue was £117.1m, compared to £120.7m last time.

Chairman John Dodds said that the restructuring of Severfield-Watson Structures was now complete and capacity had been reduced as planned. This was the second phase of restructuring and cost £2.6m and 84 lost jobs.

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Mr Dodds added: “Operating margins in the UK are recovering in line with our expectations and I am pleased to report a positive net cash position at the period end.  While there are some signs of the UK market improving in 2014, it remains challenging.  There has also been some evidence of pricing improvements but they have been sporadic rather than evidence of a sustainable trend.”

The UK order book was steady at £172m at 31 October (August 2013: £178m). However, the £34m order book of the Indian joint venture is not “at a level enough to sustain factory production at a break-even position”, he said.

New chief executive Ian Lawson, a former colleague of the chairman at Kier, joined the company on 1 November.

Mr Dodds said: "The first six months of the financial year have been marked by significant operational change and progress.  While certain challenges still remain the group has achieved an important turning point; there is, however, still further work to be done under Ian's leadership.  The completion of the restructuring at Severfield-Watson Structures and on-going operational improvements, combined with some signs of the UK market improving into 2014, gives me confidence for the future and the group's ability to build on its strong market position."

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