Severfield-Rowen profits ahead of expectations

THE construction sector may be hurting thanks to the recession but structural steel manufacturer Severfield-Rowen is heading for bumper profits.

The North Yorkshire firm told shareholders at its annual general meeting that underlying pre-tax profits for the current year will be ahead of management expectations following strong trading in the first five months.

The firm’s order book stands at £267m and is set to grow as a result of export sales.

However, Severfield said that while its position was “most welcome” in the current economic environment, it should be tempered by the fact that prospects for the UK continued “to fade” to levels below those forecast by the industry in recent months.

“We are now experiencing a significant decline in demand in the company’s key UK construction sectors and as a result we will implement further cost reductions and reconfigure capacity,” it said in a statement.

“We have good visibility for the current year and remain confident of a strong financial performance for the rest of 2009, but are cautious in our outlook for 2010.
“Over the longer term and as the UK market recovers, as it will undoubtedly do, the group will benefit from its low cost base, a robust balance sheet and other inherent advantages, combined with strong prospects in 2011 for its joint venture in India.”

The firm has numerous high profile projects in its portfolio include Terminal 2B for BAA at Heathrow Airport, and a new rehearsal studio for the BBC in Cardiff.

Recent wins include a contract to provide and erect the steel for the Shard of Glass, London Bridge development.

Progress on a new Indian plant – a joint venture with India’s third largest steel company – is on schedule to be completed by the summer of 2010.