Sheffield Forgemasters invests in its future

ENGINEERING company Sheffield Forgemasters has recorded its highest capital investment figure of £14.4m as it positions itself to weather the effects of the global economic downturn.

Capital investment by the Sheffield-based firm was the highest on record at £14.4m, more than double the figure of £5.9m last year.

Two major projects have underlined the investment push including a new 4,000 tonne press and the development of a new machine shop, primarily for ultra large castings both aimed at strengthening Forgemasters’ ability to service key markets.

The the new 4,000 tonne press is due to be fully commissioned this month, while the new machine shop is being introduced on a phased basis with full commissioning expected by the end of May 2010.

The development of the new machine shop will substantially reduce SFIL’s dependence on sub-contractors and increase its performance to the benefit of its customers.

Forgemasters has also showed resilience in countering the recession by posting increased turnover of £117.3m compared to £114.7m in the previous year boosted by a series of high profile global contracts.

Tony Pedder, chairman of Forgemasters, said: “It is during more difficult times that the strength of the group is put to the greatest test.

“We have persevered with our strategy of maintenance spend and capital for plant modernisation aiming to place us in the ideal position to supply our core markets including nuclear, steel processing, power generation, defence and offshore oil and gas. Last year’s capital investment programme was the highest ever recorded.”

Despite the effects of the global economic downturn and the inevitable squeeze on margins operating profit of £7.3m was reported.

The high level of capital expenditure in the year significantly contributed towards SFIL’s net debt increasing from £2.2m to £15.0m.

During the year the group agreed a new three year financing package with its main lender Burdale Financial.

The group is still actively engaged with customers, external finance providers and the Government with a view to securing funding for an investment in a new 15,000 tonne forging press.

Mr Pedder said that such an investment would enable the firm to produce even larger components including support for the new generation of nuclear power stations.

The firm also continuing to invest in research and development projects including it’s “Innovative Forging” initiative, which will significantly improve production efficiencies and quality levels for a range of products.

Mr Pedder added: “There are some signs that the recent turbulence in world markets is abating although many of our products tend to be “late cycle” and hence we are cautious about the prospects for 2010.

“We deliberately seek to serve a spread of markets and customers and are confident that this policy, coupled with our attention to maintaining the high quality of our products, services and technological capabilities, will put us in the best position to emerge stronger when conditions improve.”

He added: “As a sign of our confidence and determination, we continue to actively seek out and develop new opportunities to grow our business.”