Profits heating up at Sheffield Forgemasters

Heavy engineering giant Sheffield Forgemasters has hailed its new executive team as it reports a “year of progress”, reversing rising debt levels and increasing profits.

Accounts have not yet landed at Companies House, but the company reported that while revenues for the year to 31 December 2018 had dipped to £66.3m from £76.1m, it had achieved a pre-tax profit of £2.1m, up from £200,000 the year before.

Sheffield Forgemasters International Ltd said it entered 2019 with an order book of £160m as well as significantly reduced debt – now at £20.3m as opposed to the £31.8m of debts the year before. This followed an extension of its lending facilities with Wells Fargo in November to 30 April 2020.

Forgemasters said they now have 680 staff as well as 33 new apprentices, and are looking to invest in equipment in 2019.

Last year the company completed a rehaul of its board. David Bond joined as the new CEO in August 2018, after Dr Graham Honeyman stepped down from the board in July. Steve Hammell joined as CFO and Paul Cahill as COO. Colin Smith, a veteran of Rolls-Royce,was also brought in to finish the revamp of the top team.

David Bond commented: “During my first 6 months, the business has focussed on delivery of high specification products to the defence sectors in the UK and US, whilst improving margins in the fiercely competitive steel processing market.

“This has underpinned a return to a modest level of pre-tax profitability in 2018, despite lower revenues, and provides a solid foundation to further develop the business in 2019.”

“We have also renewed our efforts to expand our customer base for premium products and design consultancy in complex engineering applications, to drive future margins and profitability.

“Our technical capability and reputation for innovation is a key market differentiator and demands we maintain our skill base through our apprenticeship programme, research and development efforts and investment in the latest manufacturing technology.”

Steve Hammell, CFO, commented: “We have successfully reversed the trend of rising debt levels in the business by a strict focus on cash management whilst maintaining levels of capital expenditure. Having recently extended our lending facilities with a £40m limit, the debt reduction achieved provides the financial headroom to accelerate investment in 2019 for the longer-term benefit of our customers and employees.”

Paul Cahill, COO, who is leading a programme to deliver better operational efficacy and cost competitveness, added: “It’s a wide-ranging programme, building on our renowned strengths, to ensure we have the right capabilities and levels of operational performance to succeed in the long-term.”

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