Severfield warns cost concerns causing major project delays

Aaron Morby 9 years ago

Britain’s biggest steelwork contractor Severfield has warned that several major projects are being delayed because of tight funding and fresh cost concerns.

Ian Lawson, chief executive officer, said there remained a strong pipeline of opportunities for the group which this morning announced a return to good turnover, profit and margin growth in the first half.

He said Severfield retained an element of caution around the strong work pipeline and how quickly it would convert to orders, but added the outlook remained generally good in the short and medium term.

“The order book comprises a good balance of small and medium-sized projects, and could have been even greater had some of our larger prospects not been subject to material delays in mandates being awarded.

“A number of larger projects the group has bid for in the last six months, including three strong prospects worth collectively more than £100m, have been subject to material delays or in one case cancellation, as the availability of funding and cost concerns have affected such projects before they convert to orders.”

Despite the hiatus order levels remained strong at £185m and the steelwork firm continues to invest in targeted expansion.

Severfield grew sales 20% to £117m in the six months to the end of September, generating a 50% rise in pre-tax profit to £3.3m.

Underlying operating profit before joint ventures and associates rose to £5m restoring margins to 4.3% from 3.7% last year.

Lawson said he now planned to extend Severfield’s reach into key construction and infrastructure markets after raising the company head couny by nearlt 10% over the year.

Two week ago, Severfield completed a deal to buy a 50% stake in steel decking specialist Composite Metal Flooring for £4m, with a further £2.5m payable over the next five years. Severfield is already a major customer of the supplier, which delivers around 1m sq ft of cold rolled steel to the market each year.

He added the bridge team recruited from Mabey Bridge earlier this year had secured half a dozen projects and Severfield now planned factory improvements in order to support the full range of bridge activity which the group could take in the future.

The bolt replacement programme on the Leadenhall building continued to progress in line with planned costs and timescales and discussions between all parties involved to establish where final liability for the remedial works should rest remained on-going.

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