Severfield results hit by ongoing tough conditions in UK and Europe

(Sharecast News) - Interim results from Severfield underwhelmed investors on Tuesday after the structural steel contractor pointed to ongoing subdued market conditions across the UK and Europe. The firm reported an underlying pre-tax profit of £0.6m for the six months ended 27 September, significantly lower than the £16.1m earned last year, which it said reflected lower volumes and challenging conditions.

Analysts at Panmure Liberum, however, said they expected a "small loss to break even" result for the first half.

Revenues totalled £206.0m, down 18% over the year before, impacted by lower levels of activity across the business due to "subdued demand, some contract delays, and a sustained period of tighter pricing, particularly for near-term work".

Looking ahead, the market for structural steelwork across the UK and Europe remains "subdued" and a competitive bidding environment continues to drive tighter prices, the company said.

However, tendering activity is improving, and some "attractive large-scale projects [are] coming to market", it added.

The UK and Europe order book was £429m as of 1 November, slightly down from £444m the year before, of which £324m is for delivery over the coming 12 months.

At the same time, Severfield's Indian joint venture JSSL continues to grow strongly, growing revenues by 34% in the half and ending the period with a record order book.

The stock was down 8.7% at 27.2p by 1021 GMT.