6 September 2023
('the Company' or 'the Group')
AGM trading update - expectations for 2024 are unchanged
Severfield plc, the market-leading structural steel group, announces the following trading update, ahead of today's Annual General Meeting ('AGM').
Operational and trading update
The Group's financial performance in the first five months of the year is in line with our expectations and our cash and balance sheet position remains strong.
UK and Europe
The Group is pleased with the continuing high quality of the UK and Europe order book which stands at £479m at 1 September (1 June: £510m), of which £337m 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. In terms of geographical spread, 90 per cent of the order book represents projects in the UK, with the remaining 10 per cent representing projects for delivery in Europe and the Republic of Ireland (1 June 2023: 90 per cent in the UK, 10 per cent in Europe and the Republic of Ireland).
Since the announcement of the 2023 results in June, we have secured a significant amount of high quality new work and variations to existing contracts, and our large order book continues to provide us with good earnings visibility for the remainder of the 2024 financial year and beyond. We are also continuing to see some large project opportunities in the UK and in continental Europe, supported by the recent acquisition of Voortman Steel Construction ('VSCH'), which is integrating well into the Group's operations. Notwithstanding this, the current backdrop of more persistent high inflation and rising interest rates is resulting in some ongoing delays in the conversion of our existing pipeline of opportunities, as clients wait for economic stability, together with some lower tendering activity, particularly in the distribution sector. These more challenging recent market conditions were also a factor in the decision by Sunset Studios to pause construction on its planned new film production base in Hertfordshire, a contract which was removed from the order book in July.
Many of our chosen markets continue to have a favourable outlook - the Group has a prominent position in market sectors with strong growth potential and is well-positioned to win projects in support of a low-carbon economy. These include opportunities in both our Commercial and Industrial division and Nuclear and Infrastructure division, such as battery plants, energy efficient buildings, manufacturing facilities for renewable energy, together with work in the transport, nuclear and power and energy sectors given our capability to deliver major infrastructure projects.
In our Modular Solutions division, we have maintained our focus on growing our Severstor and Rotoflo product ranges, which attract higher margins. We continue to make significant progress in growing our revenues and client base and are on track to achieve a good performance for the 2024 financial year.
The order book has increased to £170m at 1 September (1 June: £139m). With this record order book, improving pipeline of potential orders and numerous identified growth opportunities, 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.
The outlook for the Group remains positive and our businesses are well-positioned in markets with excellent long-term growth opportunities. Whilst current trading conditions are more challenging, given the Group's historical performance, diversified activities and the strength of our order books, we continue to expect to deliver further progress and a result for 2024 which is in line with our expectations.
Half year results
The Group will announce its financial results for the half year ending 23 September 2023 on Tuesday 21 November 2023.
For further information, please contact:
Severfield Alan Dunsmore 01845 577 896
Chief Executive Officer
Adam Semple 01845 577 896
Chief Financial Officer
Jefferies International Simon Hardy 020 7029 8000
Will Soutar 020 7029 8000
Liberum Capital Nicholas How 020 3100 2000
Ben Cryer 020 3100 2000
Camarco Ginny Pulbrook 020 3757 4980
Tom Huddart 020 3757 4980
Notes to AGM statement:
Except as otherwise stated '2023' refers to the 52-week period ended 25 March 2023 and '2024' refers to the 53-week period ending 30 March 2024. The Group's accounts are made up to an appropriate weekend date around 31 March each year.
Notes to editors:
Severfield is the UK's market leader in the design, fabrication and construction of structural steel, with a total capacity of c.150,000 tonnes of steel per annum. The Group has seven sites, c.1,800 employees and 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).