Severfield profits jump as steel price hikes tempered

Aaron Morby 2 years ago
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Britain’s biggest steelwork contractor has delivered profit growth in the first half despite continuing raw material price hikes.

Revenue jumped 20% to £235m with £23m of the £39m rise due to increases in steel prices

Alan Dunsmore, chief executive officer, said Severfield had managed to mitigate the impact of raw material price hikes and increased energy costs.

This helped to deliver a 29% jump in pre-tax profit to £10.2m.

“The increase in profit highlights our ability to offset ongoing inflationary cost increases through a combination of operating efficiencies, higher selling prices and contractual protection as steel remains largely a pass-through cost for the group,” said Dunsmore.

He added that UK and Europe tendering and pipeline activity remained at consistently high levels, including opportunities in the industrial and distribution, transport infrastructure, nuclear, data centre and commercial office sectors

Dunsmore said the UK and Europe order book at the start of this month included a significant amount of high quality work and stood at £464m (1 June 2022: £486m), of which £367m was planned for delivery over the next 12 months.

He said: “Our high quality order book reflects our significant market sector, geographical and client diversification and provides us with good earnings visibility.

“Our new simplified divisional structure in the UK and Europe, with our three divisions: Commercial and Industrial, Nuclear and Infrastructure, and Products and Processing, continues the evolution of our strategy and builds on the momentum generated from the operational improvement initiatives that have been put in place over the last eight years.”

Dunsmore added: “Our Indian business continues to see strong demand for structural steel and we are ramping up the production at our Bellary facility towards its maximum capacity of around 100,000 tonnes while also looking to identify another plot of land to facilitate the future expansion of the business.”

 

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