Severfield Rowen had warned that condition were very tough in the steelwork sector and this reflected in a 75% crash in pre-tax profits to £11.1m during 2010.

Revenues fell by 24% to £226.7m reflecting a reduction in production capacity and lower contract pricing.

Tom Haughey, chief executive, said that a combination of increasing steel prices and continuing capacity reductions by competitors led to more stable pricing towards the year end, although margins remained tight.

The contractor’s operating margins reduced from 15% to 6% in the year.

Severfield ended the year with a net debt of £15m, due to the impact of higher steel prices on working capital and clients paying later.

He said: “Twelve months ago the company had the view that 2010 would be the low point of the cycle for our industry, but UK economic conditions, the public spending review and rising steel costs are likely to prolong the relatively weak levels of activity throughout most of 2011.

Severfield now predicts an improvement in 2012 when the mix of project type would switch.

The pipeline of enquiries is more encouraging than six months ago, however a large proportion of the work will be for commencement in 2012.

Despite this better outlook Haughey said further cost reduction initiatives remained under review and development, including a procurement related initiative.