Severfield Rowen cuts 84 jobs but remains in the red

Aaron Morby 8 years ago

The £2.6m cost of a second wave of 84 jobs cuts at Severfield Rowen’s largest steel business Watson held the firm in the red in the first half of the year.

Extensive restructuring at Severfield-Watson Structures is now complete and has resulted in a 10% cut in fabrication capacity.

John Dodds, non-executive Chairman, said the steel contractor would now benefit from  annual savings of £4m stemming from the two-phased restructuring.

Severfield-Rowen is still working problem contracts through its books like the London Cheesegrater office job, which contributed to a £29m pre-tax loss in the previous period covering 15 months.

But Dodds added fresh management measures to improve risk assessment, estimating control and cross-group communication were starting to impact.

He said: “These improvements are on-going but are already delivering greater stability and control of new projects being secured by the group.

“While certain challenges still remain the group has achieved an important turning point.

“The completion of the restructuring at Severfield-Watson Structures and on-going operational improvements, combined with some signs of the UK market improving into 2014, gives me confidence for the future and the group’s ability to build on its strong market position.”

In the first six months of this year the steel contractor posted a pre-tax loss of £2.7m, although underlying profits before tax stood at £1.4m. Sales slipped back slightly to £117m after a modest reduction in volumes.

Dodds warned that while there were some signs of the market improving next year, it remained challenging.

Evidence of pricing improvements remained sporadic rather than evidence of a sustainable trend, he warned.

Severfield Rowen suffered further losses of £2.7m because of difficult trading at its Indian joint venture and a £400,000 hit from its stake in Kennedy Watts Partnership, a drawing office which went into administration.

Following the completion of the £45m rights issue earlier this year and the associated refinancing, Severfield Rowen has a £35m bank facility in place until November 2016.

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