Severfield-Rowen rings the changes at Watson Steel
STRUCTURAL steel group Severfield-Rowen is to merge three of its companies because of “stagnant” demand in the UK market.
Severfield-Rowen Structures, Watson Steel Structures and Steelcraft Erection Services are to become a single trading entity – Severfield-Watson Structures.
The move will see manufacturing continue at the group’s two existing plants at Bolton and Dalton in North Yorkshire. Watson Steel supplied the structural steel work for the construction of the Olympic Stadium in London.
Severfield-Rowen said the operations at Fisher Engineering and Atlas Ward Structures would “continue largely as at present”.
The group believes Severfield-Watson Structures will be the largest structural steelwork company in Europe, providing a fully integrated design through fabrication and site erection service to clients.
Chief executive Tom Haughey falling construction demand and price pressures were continuing challenges.
He said: “Despite the backdrop, the UK order book remains stable at £218m, which maintains full activity at all UK plants into 2013 and suggests further growth in market share.
“UK margins are nonetheless coming under pressure again as clients and the supply chain push much harder to compete in a shrinking market.
“The demand outlook for the UK, with the current exceptions of London commercial, industrial, warehousing and some energy sectors, continues to be stagnant at best. Political policy direction on UK energy would be a helpful stimulus to UK construction but the potential projects pipeline of £465m in the UK remains sufficient for our needs in 2013.”
Mr Haughey said that he expects the integration of the three companies at the North Yorkshire headquartered business to be completed before the end of the year.
Severfield-Rowen made the announcement as it posted underlying profit before tax of £1.5m for the six months ended June 30, down from £3.4m the previous year. Revenues increased to £135.9m.
The group said its India-based joint venture company, JSW Severfield Structures, was operating profitably.
Mr Haughey added: “Whilst we are pleased by the stability in the order book and our market position, with uncertain demand levels and a difficult pricing environment in the UK having an impact on our margins, we envisage a challenging six months ahead and are taking actions in response to this.
“Looking further out, we remain determined to grow the business at home and in India, despite the economic backdrop, and are confident that our strategy leaves the group well positioned to take advantage of opportunities both in India and in the UK.”
