Slow market recovery sees Severfield swing to statutory loss

(Sharecast News) - Severfield swung to a statutory loss for the year ended 29 March, it reported on Thursday, as tougher market conditions in the UK and Europe and exceptional bridge remediation costs weighed on earnings. However, the structural steel specialist maintained its outlook for the current financial year, supported by a diversified order book and growing momentum in India.

Group revenue fell 3% to £450.9m, while underlying operating profit before joint ventures dropped 42% to £21.7m.

The London-listed group posted a statutory operating loss of £13.7m compared with a profit of £26.4m a year earlier.

Its headline result was impacted by £35.6m of non-underlying costs, including £23.4m of net bridge-related remediation expenses.

A final insurance settlement on the bridge issues had now been agreed.

Underlying profit before tax fell by half to £18.1m, while basic underlying earnings per share dropped to 4.3p.

The group posted a statutory pre-tax loss of £17.5m, swinging from a profit of £23m in the prior year.

Net debt rose to £43.1m on a pre-IFRS-16 basis, including £13.8m of amortising term loans.

Despite the weak results, Severfield reported a growing order book of £444m as at 1 July, up from £410m in November, with £324m scheduled for delivery over the next 12 months.

The pipeline included projects in infrastructure, energy, industrial, data centres and commercial offices.

It also reported a record order book of £240m in its Indian joint venture JSSL, supported by new production facilities in Gujarat expected to come online in the 2026 financial year.

"After many years of strong profit growth, the 2025 financial year was a difficult year for the group," said chairman Charlie Cornish.

"Whilst we performed well operationally, delivering a diverse range of projects for clients across many of our key market sectors, tough market conditions in the UK and Europe, combined with the ongoing bridge remedial works programme, contributed to weaker financial results.

"Despite the current market backdrop, we have secured a strong baseload of work for 2026 and into 2027, and we continue to see some good projects coming to market."

The company noted that the UK and European markets for structural steel remained subdued, with tighter pricing and project delays continuing to affect profitability.

A recovery in some sectors had been slower than anticipated, although recent tendering activity had improved.

In India, Severfield said it was targeting new markets and expects to benefit from significant long-term structural steel demand.

The group extended its £60m revolving credit facility to December 2027, and said its expectations for the 2026 financial year remained unchanged from the guidance provided in its March trading update.

Cornish said the company was well-positioned to benefit from long-term growth trends, including those related to the green energy transition and the UK Government's infrastructure investment plans.

"Our positioning and prospects in these markets underpin the board's confidence in the group's ability to deliver attractive shareholder returns in the future and provide us with a strong platform to fulfil our strategic growth aspirations."

At 1143 BST, shares in Severfield were down 5.36% at 32.84p.

Reporting by Josh White for Sharecast.com.