Severfield shares soar amid record £479m order book

Shares of Severfield plc, the Thirsk, North Yorkshire-based steel group, rose about 12% on Wednesday after it published a trading update for the year ended March 31, 2022, showing a record UK and Europe order book of £479 million.

The group said it expects to deliver a full year result in line with management’s previous expectations.

In the second half of the year, we have continued to secure a significant value of new work, resulting in a record UK and Europe order book of £479m at 1 April 2022 (1 November 2021: £393m), of which £382m is for delivery over the next 12 months,” said Severfield.

“The order book remains well-diversified and contains a healthy mix of projects across the group’s key market sectors.

“In terms of geographical spread, 94 per cent of this order book represents projects in the UK, with the remaining 6 per cent representing projects for delivery in Europe and the Republic of Ireland.

We continue to be encouraged by the current level of tendering activity across the group, both in the UK and in continental Europe, and are well-positioned to take advantage of some significant opportunities in the industrial and distribution (battery plants and distribution centres), stadia and leisure, transport infrastructure, nuclear and data centre sectors.

Despite seeing further input cost inflation (including in steel prices) and some disruption to raw material supplies as a result of Russia’s invasion of Ukraine, we are currently managing these effectively, and steel remains largely a pass-through cost for the group.”

On its India business, Severfield said: “The Indian joint venture (JSSL) has performed profitably and in line with expectations in the second half of the year.

“This follows a difficult start to the year when output was disrupted by the second wave of COVID-19.

“Notwithstanding some current inflationary pressures, JSSL has continued to win new work, resulting in a record order book of £166m at 1 April 2022 (1 November 2021: £140m).

“In terms of mix, 40 per cent of the order book represents higher margin commercial work, with the remaining 60 per cent representing industrial projects, mainly for JSW.

“This order book, together with JSSL’s improving pipeline of potential orders, reflects a continuing strong underlying demand for structural steel in India, leaving the business very well-positioned to take advantage of an improving economy.”