Covid-19 crisis overshadows improved set of results for steelwork contractor
The country’s biggest steelwork contractor has warned it is beginning to see some schemes being put on hold as spooked clients delay jobs because of the covid-19 crisis.
Severfield, which is working on schemes to redevelop Lord’s cricket ground, Fulham’s new stand at Craven Cottage and the Google headquarters building at King’s Cross, said it was suspending a dividend payment and had deferred tax payments and loan repayments to preserve cash.
Chief executive Alan Dunsmore said: “We are now seeing evidence of investment decisions being delayed in some of our sectors as clients and developers appear to be adopting a more cautious approach until greater market clarity returns. Pricing generally remains competitive.”
He added: “The overall impact of covid-19 remains uncertain. Whilst all of our factories are operational and all of our construction sites in the UK and Europe remain open, it is inevitable that the virus will have an impact on profitability in 2021. However, at this early point in our financial year it is impossible to predict the full extent of this financial impact.”
The firm, which had net cash funds of £16.4m at its year end, has modelled a range of scenarios for its current financial year including a ‘worst case’ impact which sees no more orders for the next 12 months and a second lockdown later this year.
It added that its Indian joint venture JSSL had also been affected by the covid-19 lockdown imposed by that country’s government and said operations had been disrupted in the first quarter of this year which it said was likely to continue over the next few months.
Severfield, which carried out more than 100 jobs last year in the UK and Europe, said its order book at 1 June was £271m of which £243m was for delivery over the following year. It said the £271m was a fall on the record £323m it announced at its interim results last November which it added was expected.
The firm said it had hit its five year strategic target of racking up a £26m profit by 2020 with an underlying pre-tax profit of £28.6m, up from £24.7m.
Pre-tax profit in the year to 31 March was up 4% to £25.8m. Revenue during the period was up 19% to £327m.
The firm added that NG Bailey chairman Kevin Whiteman, already a non-executive director at Severfield, will take over from former Kier chief executive John Dodds as chairman in September.