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Severfield-Rowen issues profits warning

5 Nov 12 Structural steel group Severfield-Rowen reports problems with project delays, cost over-runs and customers slow to pay invoices.

Severfield-Rowen Structures, Watson Steel Structures and Steelcraft Erection Services are all performing below expectation. Only Atlas Ward Structures and Fisher Engineering are meeting expectations.

The three under-performing divisions are being merged into a single division, Severfield-Watson Structures to save £2m a year in overheads. Fifty jobs are to go in the rationalisation.

In a trading update to shareholders today, the company said that group profit-before-tax in 2012 was now likely to be around £1m.

“The board remains confident that the ongoing business reorganisation and the conclusion of the affected projects will see an improvement in performance from Severfield-Watson Structures in calendar Q1 2013, together with continued strong performance from Atlas Ward Structures and Fisher Engineering,” said chief executive Tom Haughey.

“The Group's UK businesses continue to operate in a difficult climate with the previously flagged pricing pressure and protraction of contractual settlements still posing significant challenges as clients and the supply chain compete harder in a shrinking market.”

He added: “Demand in the UK remains depressed, however the group's order book levels continue to be consistently strong.  Our outlook for UK demand does not anticipate a recovery, but we remain confident that our market leading position and identified future prospects will enable the group to sustain activity levels in the coming periods.”

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