Chief executive Ian Lawson admits past mistakes but says 鈥榯ighter processes鈥� have since been brought in
Severfield 鈥渢otally underestimated鈥� the job of erecting the steel structure of London鈥檚 Cheesegrater tower, the firm鈥檚 chief executive Ian Lawson has admitted.
Lawson said the complexity of the Cheesegrater contract, on which the firm was forced to write off 拢10m, was 鈥渢otally underestimated by us, particularly in terms of logistics and erection on site鈥�.
But he said the firm had 鈥渢ightened its processes鈥� since then to 鈥渆nsure there aren鈥檛 any surprises鈥� on contracts, including introducing monthly contract check-ups, and had also recruited a new legal director to 鈥渕ake sure we鈥檙e not signing up to onerous or unacceptable terms and conditions鈥�.
His comments came after Severfield reported improved results for the year to 31 March 2014 yesterday, including a reduced pre-tax loss of 拢4.1m, and predicted recovery in the specialist steelwork sector by the end of the year.
Lawson joined the steelwork contractor in September after 拢20.1m of cost overruns on problem contracts were identified, including a 拢10m write-off on 122 Leadenhall tower in London, known as the Cheesegrater (pictured). These cost overruns resulted in a series of profit warnings, the exit of Lawson鈥檚 predecessor Tom Haughey and a pre-tax loss of 拢28.9m in the 15 months to 31 March 2013.
Lawson said the firm was feeling 鈥渋ncreasingly optimistic鈥� about the steelwork sector and expected an upturn in 鈥渓ive contracts at the end of this year or start of next year鈥�, particularly in the offices, retail and sport stadiums sectors.
He said the firm鈥檚 focus this year is 鈥渕argin growth rather than revenue growth鈥�. Severfield鈥檚 underlying operating margin hit 3.3% in the year to 31 March 2014, compared to -6% the previous year.
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 a 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 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.
The firm, formerly known as Severfield Rowen, launched a rebrand dropping 鈥楻owen鈥� from its name yesterday.
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