Severfield shares soar amid record order book, buyback

Shares of Severfield, the Thirsk, North Yorkshire-based steel group, rose as much as 14% as the firm published a strong trading update for the year ended March 30, 2024, and announced its intention to commence a share buyback programme to return £10 million to shareholders.

The company reported a record UK and Europe order book of £511 million at April 1, 2024.

Severfield operates seven sites with 1,800 employees and has expertise in large, complex projects across a broad range of sectors. The group also has an established presence in the expanding Indian market through its joint venture partnership with JSW Steel, India’s largest steel producer.

Severfield also announced that Charlie Cornish will join the firm as non-executive chair and director.

“Charlie will join the company’s board on 1 May 2024 and will take over as chair after the AGM on 30 July 2024 when Kevin Whiteman steps down from the board, having completed his nine-year tenure,” said Severfield.

Charlie is currently non-executive chair of Manchester Airports Group (MAG), Core Highways Group and Ipsum Group.

“He was previously CEO of MAG for 13 years. He was also a main board member of United Utilities Group plc for seven years and managing director of their commercial business (called utility solutions).

“He has substantial experience of developing strategy and leading large complex businesses across a number of relevant sectors.”

On trading, Severfield said: “The group has made good progress in the second half of the 2024 financial year and we now expect to deliver a full year result which is slightly above our 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 £511m at 1 April 2024 (1 November 2023: £482m), of which £397m is for delivery over the next 12 months.

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

“The growth in the order book reflects the continued strengthening of our market position in Europe, supported by the acquisition of Voortman (VSCH), and 32 per cent of the order book now represents projects in continental Europe and Ireland (1 November 2023: 13 per cent).

We continue to see large project opportunities in both our Commercial and Industrial division and Nuclear and Infrastructure division, in the UK, continental Europe and Ireland.

“These include projects in support of a low-carbon economy such as battery plants, energy efficient buildings, manufacturing facilities for renewable energy and offshore wind projects.

“Furthermore, the group remains well-placed to meet an ongoing demand for infrastructure investment, including a growing focus on major projects which can mitigate the impacts of climate change and deliver energy security.

“This includes nuclear (such as Sizewell C and small nuclear reactors), carbon capture and hydrogen production, together with HS2 and Northern Powerhouse Rail.

In our Modular Solutions division, we have maintained our focus on growing our Severstor product ranges, which attract higher margins, and on developing our growing pipeline of opportunities, including in growth areas such as renewable energy and data storage.

“We continue to make good progress in growing our revenues and client base and expect this division to report a small profit for the 2024 financial year …

The Indian joint venture (JSSL) performed well in the second half of the year and is expected to deliver another step up in profitability in 2024.

“JSSL’s total output for 2024 is likely to exceed 100,000 tonnes, including sub-contracted work, for the second year running.

“The order book was £142m at 1 April 2024 (1 November 2023: £165m).

“With an improving pipeline of potential orders and numerous identified growth opportunities, including those in new and existing market sectors, and with the land in Gujarat for future expansion now secured, JSSL is well positioned to take advantage of a very encouraging outlook for the Indian economy and a strong underlying demand for structural steel in construction.”

In its outlook, Severfield said: “The group is performing well, the outlook is positive and our businesses are well-positioned in markets with excellent long-term growth opportunities.

“Whilst there remains some uncertainty in the wider economy, we are seeing an improvement in market conditions which, together with our high-quality order books, diversified activities and operational delivery capabilities, provides us with confidence for the year ahead.”