Specialist strikes cautious note on UK as it targets “immense” India prospects
Profitability at the UK’s largest structural steel specialist Severfield-Rowen is down over the first half of the year as the firm issued another downbeat statement on the state of the UK economy.
Underlying profit before tax fell 33% over the first six months to 30 June, from £8.2m to £3.4m, while underlying net margins also dropped significantly from 6.5% to 2.8%.
The firm expects demand in the UK market to remain subdued for the next few years and chief executive Tom Haughey said the contractor had been “justified” in its consistent caution about the timing and extent of recovery.
In March the firm stated it did not expect the UK market to recover until 2012.
Haughey said: “The company is pleased with its performance in the UK against the backdrop of a prolonged and unprecedented period of weak demand.”
The company said its UK order book grew by 21% over the last three months from £221m in May to £249m.
Turnover across the group was stable, with only a marginal drop in revenue from£126.7m last year to£122m.
Severfield-Rowen said it was bullish about growth opportunities for its Indian venture JSSL.
Haughey said prospects for the company and its partner JSW Steel in the country were “immense”.
JSSL’s order book also grew 22% over the last three months, from £36m in May to £41m as of this month.
Haughey said: “The company is forward planning on the basis that (UK) demand will remain subdued for the next few years, showing only marginal growth for the market as a whole but with further opportunity in the London commercial, power and industrial/distribution sectors.
“India remains the focus of the company’s growth ambitions, with opportunity being translated into reality via the scale and content of JSW Severfield Structures’ order book and the progress being made in achieving operational and commercial objectives.”
Net borrowings for the group more than doubled over the first six months from £8.2m in 2010 to £22.8m.