TIDMSFR
RNS Number : 2069W
Severfield PLC
22 April 2021
22 April 2021
Severfield plc
('the Company' or 'the Group')
Pre-close trading update
FY21 upgrade: improved expectations for the full year
Severfield plc, the market leading structural steel group, today
issues the following trading update for the year ended 31 March
2021, ahead of the announcement of its annual financial results on
Wednesday 16 June.
FY21 expectations and outlook
The Group is currently performing well and based on the good
progress made in the second half of the 2021 financial year, we now
expect to deliver a full year result which is comfortably above
management's previous expectations.
Whilst we continue to be mindful of the COVID-19 backdrop, we
remain optimistic about the future. We continue to regularly win
high-quality work resulting a strong order book of GBP315m, which
supports trading throughout the 2022 financial year and beyond. We
have an encouraging pipeline of opportunities in the UK, Europe and
India, a strong balance sheet position, expertise in managing
complex projects and good long-standing client relationships. This
leaves us well-placed to win work in the diverse range of market
sectors and geographies in which we operate and across a wide
client base, providing us with extra resilience and the ability to
increase our market share in the future.
Operational and trading update
UK and Europe
The Group has, to date, been well-prepared for and coped well
with the challenges presented by the COVID-19 pandemic, including
the most recent national lockdown in January. The Group's factories
and sites are fully operational, and we have been trading at normal
(pre-pandemic) levels, in line with government and industry
guidelines, since the beginning of Q2 of the 2021 financial
year.
In the second half of the year, we have continued to secure a
significant value of new work, resulting in a UK and Europe order
book of GBP315m as at 1 April 2021 (1 November 2020: GBP287m),
including GBP17m for the recently acquired DAM Structures, of which
GBP252m is for delivery over the next 12 months. This leaves the
Group well-positioned with a strong future workload for the 2022
financial year and beyond. In terms of geographical spread, 80 per
cent of this order book represents projects in the UK, with the
remaining 20 per cent representing projects for delivery in Europe
and the Republic of Ireland.
We remain very encouraged by the current level of tendering and
pipeline activity across the Group. We continue to see a good
number of opportunities, albeit at more competitive prices given
the current market conditions, in our key market sectors, including
in the industrial and distribution, transport infrastructure,
stadia and leisure, nuclear and data centre sectors.
India
The Indian joint venture ('JSSL') has continued its recovery
from the disruptive effects of COVID-19. After a difficult first
half, the company has maintained a largely break-even profit
position in H2, reflecting an Indian market which is starting to
show signs of recovery. JSSL's order book as at 1 April 2021 was
GBP104m (1 November 2020: GBP98m) and this includes several recent
commercial awards (a large data centre in Chennai and commercial
offices in Bangalore and Hyderabad) and some further industrial
work for JSW. In terms of mix, 90 per cent of the order book
represents higher margin commercial work, with the remaining 10 per
cent representing industrial projects, mainly for JSW.
JSSL's pipeline of potential orders continues to include several
commercial projects for key developers and clients with whom it has
established strong relationships. JSSL is also developing formal
strategic alliances with certain key clients, mainly for
commercial, data centre and healthcare projects. This leaves the
business well placed to win more work in the future, albeit we
remain mindful of the evolving COVID-19 backdrop in India.
Strong balance sheet and financial position
Cash generation in H2 was good and our financial position
remains strong, allowing us to support continued investment in
efficiency and growth, both organically and by acquisition,
including the recent purchase of DAM Structures, which is
integrating well into the Group's operations. Year-end net funds
(on a pre-IFRS 16 basis) were c.GBP4m, representing cash of
c.GBP25m offset by the outstanding acquisition loans for Harry
Peers of GBP9m and DAM Structures of GBP12m. The Group has
continued to operate in a net funds position throughout the
pandemic maintaining significant amounts of cash headroom (c.GBP50m
as at 31 March 2021) in banking facilities, which expire in October
2023.
The Group has made no claims for support under any
employee-related government schemes (including the Coronavirus Job
Retention Scheme) and all PAYE, VAT and other COVID-related tax
deferrals have now been repaid in full.
SteelZero - building a sustainable future
The Group has strengthened its commitment to reducing carbon
emissions by signing up to SteelZero, a global initiative to speed
up the transition to a net zero steel industry. SteelZero is led by
the international non-profit organisations, the Climate Group and
Responsible Steel. This customer-led initiative, which aims to
drive a major shift in the global market for the responsible
sourcing and production of steel, is being signed up to by an
increasing number of steel buyers, both in the UK and
internationally.
Targeting net zero steel from the demand-side of the supply
chain makes this the first initiative of its kind, with the
potential for it to have significant impact on investment, policy,
manufacturing, and production in the construction sector. By
signing up, we are making a public commitment to transition to
procuring, specifying, or stocking 100 per cent net zero steel by
2050, with certain interim targets to be achieved by 2030.
Jenny Chu, Head of Energy Productivity Initiatives at the
Climate Group, said: 'We are delighted that Severfield, one of the
UK's leading structural steel construction companies, has become
the latest member to join SteelZero. The initiative gives
forward-looking companies a springboard from which they can use
their collective purchasing power and influence to demonstrate
there is strong demand for clean and sustainable steel.'
For further information, please contact:
Severfield Alan Dunsmore 01845 577 896
Chief Executive Officer
Adam Semple 01845 577 896
Group Finance Director
Jefferies International Simon Hardy 020 7029 8000
Will Soutar 020 7029 8000
Camarco Ginny Pulbrook 020 3757 4980
Tom Huddart 020 3757 4980
Notes to editors:
Severfield is the UK's market leader in the design, fabrication
and construction of structural steel, with a total capacity of
c.165,000 tonnes of steel per annum. The Group has six sites,
c.1,500 employees and expertise in large, complex projects across a
broad range of sectors. The Group also has an established presence
in the expanding Indian market through its joint venture
partnership with JSW Steel (India's largest steel producer).
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