Severfield order book £483m for UK and Europe

Shares of Severfield plc, the Thirsk, North Yorkshire-based steel group, rose about 5% after it published a strong AGM trading update for the first five months of the 2023 financial year  “with several ongoing contracts expected to deliver significant profits in H2.”

Severfield, which has 1,500 employees, operates in the UK and Europe and also has an established presence in the expanding Indian market through its joint venture partnership with JSW Steel, India’s largest steel producer.

“The group is pleased with the continuing high quality of the UK and Europe order book which stands at £483m at 1 September (1 June 2022: £486m), of which £363m is for delivery over the next 12 months,” said Severfield.

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

“In terms of geographical spread, 97 per cent of the order book represents projects in the UK, with the remaining 3 per cent representing projects for delivery in Europe and the Republic of Ireland (1 June 2022: 96 per cent in the UK, 4 per cent in Europe and the Republic of Ireland).

As well as maintaining an historically high level of orders across the group, we are also seeing a strong pipeline of further potential opportunities, in the UK and in continental Europe, and we remain well positioned to take advantage of many of these in both our Commercial and Industrial division and Nuclear and Infrastructure division.”

In India, Severfield said: “JSSL is continuing to ramp up its Bellary facility towards its maximum capacity of c.100,000 tonnes in 2023.

“The company’s strong order book of £152m at 1 September (1 June 2022: £158m), together with an improving pipeline of potential orders, reflects a continuing strong underlying demand for structural steel in India.

“All this leaves the business very well-positioned to take advantage of a growing economy which, together with the ongoing conversion of the market from concrete to steel, will drive the success and long term value of the business.

In conjunction with our joint venture partner, we are close to selecting another plot of land to facilitate the future expansion of the business.

“This land purchase, which will be completed in H2, will allow the business to expand its geographical footprint whilst providing it with the platform to build quickly and incrementally add the necessary volume to support the expected future market growth.”

In its outlook, Severfield said: “Whilst we remain mindful of the macro-economic backdrop and particularly the inflationary pressures which are expected to continue for the foreseeable future, we are continuing to manage these well.

“Given the group’s performance to date and the current visibility of future workload for delivery in the remainder of the 2023 financial year, we continue to expect to deliver further progress and a full year performance which is in line with our previous expectations.”