Specialist contractor stems overall losses but is hit by further losses in India
Severfield stemmed its losses in the year to 31 March 2014 and predicted recovery in the specialist steelwork sector by the end of the year.
The firm posted a pre-tax loss of 拢4.1m, down from a 拢28.9m pre-tax loss over the previous reporting period covering the 15 months to 31 March 2013.
Revenue fell to 拢231.3m, down from 拢318.3m, partly reflecting a 鈥渞eduction in capacity鈥� in the business due to downsizing and also the shorter reporting period.
The firm was hit by further losses from its Indian steelwork joint venture, with its share of losses growing to 拢3m, up from 拢0.3m over the previous period.
The firm said it made an overall underlying pre-tax profit, which strips out exceptional costs, of 拢4m, compared to a 拢21.5m underlying loss the previous year.
The firm鈥檚 underlying operating margin hit 3.3% compared to -6% the previous year.
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The firm鈥檚 UK order book stood at 拢168m on 31 March 2014, down marginally from 1 November 2013 at 拢172m, while the Indian order book grew slightly to 拢41m from 拢34m over the same period.
Severfield鈥檚 share price was down 2.8% in early trading following the results announcement.
The firm, formerly known as Severfield Rowen, launched a rebrand dropping 鈥楻owen鈥� from its name yesterday.
The improved results come after a tough period of trading for the firm.
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 loss 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.
Former Kier board member Ian Lawson was recruited as chief executive in September.
Severfield said it had made 鈥済ood progress鈥� resolving contract cost overruns during the year and 鈥渢he board believes that balance sheet risk relating to these contracts has now been removed鈥�.
The firm said it expects the steelwork market to 鈥減ick up towards the end of 2014 but the current order book does not yet reflect this鈥�.
The firm said a rights issue launched in February 2013 and completed in April 2013 had 鈥渟ignificantly strengthened鈥� the firm鈥檚 balance sheet.
Ian Lawson, chief executive of Severfield, said: 鈥淒uring the financial year Severfield has achieved substantial operational improvements across the Group and delivered a significant turnaround in underlying profit before tax.
鈥淧leasingly, the Group鈥檚 ongoing stabilisation and recovery generated increasing UK operating margins supported by a strong balance sheet and solid order book.
鈥淲hile 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.
鈥淭he development of a clear Group strategy in addition to the anticipated recovery in the core UK market means Severfield is well placed for future growth.鈥�
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