Severfield in record £508m UK, Europe order book

Severfield plc, the Thirsk, North Yorkshire-based steel group, reported a record UK and Europe order book of £508 million at March 1, 2023, of which £391 million is for delivery over the next 12 months.

In India, Severfield reported a strong order book of £146 million at March 1, up from £143 million in November.

Severfield has six sites, 1,700 employees and has a joint venture partnership with JSW Steel, India’s largest steel producer.

Severfield’s news came in a trading update for the year ended March 25, 2023, ahead of the firm’s capital markets event for analysts and shareholders.

“The group is pleased to report that performance in the second half of the 2023 financial year has been strong and we expect to deliver a full year result in line with our previous expectations …” said Severfield.

“In the second half of the year, we continued to secure a significant value of high-quality work, resulting in a record UK and Europe order book of £508m at 1 March 2023 (1 November 2022: £464m), of which £391m is for delivery over the next 12 months.

“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, 93 per cent of the order book represents projects in the UK, with the remaining 7 per cent representing projects for delivery in Europe and the Republic of Ireland.

We are encouraged by the current level of tendering and pipeline activity across the group, seeing a consistently high level of opportunities both in the UK and in continental Europe, as many of our chosen markets continue to have a favourable outlook.

“In our Commercial and Industrial division, we remain well positioned to take advantage of many opportunities, including battery plants, data centres, TV and film studios, commercial offices and stadia and leisure projects.

“In our Nuclear and Infrastructure division, we are also seeing a healthy pipeline of opportunities including in the nuclear sector, where we have recently been selected as one of two ‘key delivery partners’ to deliver structural steelwork at Sellafield as part of the long-term Programme and Project Partners framework …

The Indian joint venture (JSSL) has performed in line with expectations in the second half of the year. JSSL is continuing to ramp up its Bellary facility towards its maximum capacity of c.100,000 tonnes, with total output for 2023 including sub-contracted work likely to exceed 100,000 tonnes.

Notwithstanding some current market pressures in India, JSSL has continued to win new work, resulting in a strong order book of £146m at 1 March 2023 (1 November 2022: £143m).

“In terms of mix, 50 per cent of the order book represents higher margin commercial work, with the remaining 50 per cent representing industrial projects, mainly for JSW, our joint venture partner.

“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 economy which is expected to grow significantly in the medium term.

In conjunction with JSW, we are in final negotiations to secure a plot of land in India to facilitate the future expansion of the business. The land purchase will allow the business to expand its geographical footprint whilst providing it with the platform to expand quickly and add the necessary volume to support the expected future market growth.”

In its outlook, Severfield said: “The group’s businesses are well-positioned in markets with excellent long-term growth opportunities, underpinned by our new, simplified divisional structure.

“Whilst we remain mindful of the macro-economic backdrop, given the group’s historical performance and the current visibility of forward workload for delivery in the 2024 financial year and beyond, we look to the future with confidence.”