The UK鈥檚 largest specialist steelwork contractor says trading is in line with expectations as it eyes recovery
The UK鈥檚 largest specialist steelwork contractor Severfield-Rowen has said it is on track to meet its trading expectations and is eying recovery after a torrid previous financial year.
In an update to the City this morning, the firm said its trading was in line with expectations and the business was now more stable than last full financial year to 31 March 2013 year, which the firm described as the 鈥渕ost challenging in the group鈥檚 history鈥�.
Last year the firm was hit by 拢20.1m of cost overruns on a number of problem contracts, including a 拢10m write-off on the 122 Leadenhall tower in London, known as the Cheesegrater (pictured), with the firm reporting a lost of 拢29m.
The period saw a number of profit warnings and the departure of the firm鈥檚 chief executive Tom Haughey, with a rights issue in February raising 拢44.8m.
But the firm today said it had a 鈥渟table鈥� order book of 拢172m, which was a 鈥渓evel with which management is comfortable鈥�.
The firm said: 鈥淭he UK business is showing much greater stability following the completion of the reorganisation undertaken in the last calendar year.
鈥淭he operational improvement programme continues to make good progress, supporting management expectations that margins will continue to recover over the next two years even without any upturn in the UK market.鈥�
鈥淭he UK market continues to show signs of improvement. This is particularly evident in the pipeline of potential orders the business is seeing, though it is likely to be well into the next financial year before this starts to have any notable impact on the size or mix of the order book.鈥�
However, the firm said trading in India 鈥渃ontinues to be difficult鈥� and would remain so 鈥渁t least until鈥� after May 2014 election in the country.
鈥淚n the meantime, the focus remains on strengthening the commercial focus of the business and managing costs tightly,鈥� the firm said.
鈥淭he order book level of 拢32 million remains stable, but as highlighted previously, needs to be significantly higher to maintain break-even production levels in the factory.鈥�
The firm added: 鈥淭he UK business continues to strengthen and perform in line with management鈥檚 expectations.
鈥淲hile India remains challenging, senior management is focused on improving the situation both commercially and operationally.
鈥淥verall, the Group is ideally positioned for recovery in the UK construction market, with its improving operations, good market share and strong balance sheet.鈥�
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