New boss Paul McNerney’s review of business due to finish by summer
Severfield has said that several of its jobs due to start this year have been delayed with the firm being forced to take on a less profitable work instead.
In a trading update this morning, the steelwork contractor said: “Secured projects that were previously expected to commence in early FY27 have been delayed, with a number now anticipated to enter production in the second half of FY27.
“As a result, whilst the order book continues to provide good visibility of future activity, it reflects a mix of near-term work secured at tighter margins and larger projects scheduled to commence later in FY27.”
It said that underlying pre-tax profit for the year to 28 March would be around £10.2m – in line with expectations.
Severfield is shutting its £24m modular business as part of a restructure by its new chief executive.
Paul McNerney arrived at the firm from Laing O’Rourke last November and immediately outlined a review of the company which has recently been hit by a series of losses.
The firm said the review would be completed by the time it publishes its next set of annual results which will be due out on 23 June.
It added: “New management’s review of the business has continued to progress well.” Severfield said “disciplined cash management” during the period meant its net debt for the full year was expected to be £28m – more than £20m below the previous consensus of £48.5m.
The firm said it had recouped a further £7.5m in insurance payments for its work to carry out repairs on several bridges, the majority of which are on the HS2 railway. The latest payment means it has now recovered £27.5m of the costs.
Last July, the firm said it estimated the cost of sorting out the problems, which centre on welding defects, would be £43.4m.
The firm’s order book for the UK and Europe stood at £438m but the delays to jobs meant that it was “adopting a cautious view of the year ahead and now expects FY27 underlying profit before tax to be in the range of £12m-£15m”.
It said this “reflected increased geopolitical uncertainty, together with broader macroeconomic conditions, the impact of later project start dates, and a continued tight pricing environment”.
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