Severfield-Rowen looks to future
STRUCTURAL steel group Severfield-Rowen said this morning it is looking ahead with confidence as a result of on-going operational improvements and some signs of the UK market improving into 2014.
Updating the market for the six months to September 30, the North Yorkshire headquartered group reported underlying profit before tax of £1.4m compared to a £21.1m loss in 2012, while its UK underlying operating margin (before JVs and associates) recovered to 2.5% from -17.1% the previous year.
Severfield-Rowen reported revenue of £117.1m for the period, which it said reflects a modest reduction in volumes in the period as the 10% capacity reduction in the largest business, Severfield-Watson Structures, started to take effect.
The group, which appointed new chief executive Ian Lawson earlier this month, reported a period end net cash position of £1.5m and said further restructuring of largest business, Severfield-Watson Structures, concluded successfully.
Severfield-Rowen said its operational improvement programme is progressing well and continuing, and its UK order book was steady at £172m at October 31 (August 2013: £178m) while its India order book stood at £34m.
The group said: “The first six months of the financial year has been a period of good operational progress for the group. The restructuring programme within the largest business, Severfield-Watson Structures, is now complete and capacity has been reduced as planned. In parallel with this, the operational improvement programme put in place earlier in the year is progressing well and will continue for the remainder of the year and beyond.
“Operating margins in the UK are recovering in line with our expectations and I am pleased to report a positive net cash position at the period end. While there are some signs of the UK market improving in 2014, it remains challenging. There has also been some evidence of pricing improvements but they have been sporadic rather than evidence of a sustainable trend.
“Our Indian joint venture has experienced a challenging period of trading in a difficult economic climate. As highlighted previously, volumes generated by the order book have not been at a level to sustain factory production at a break-even position. The focus remains on commercial development to improve this situation combined with a tight control of costs.”
John Dodds, non-executive chairman, said: “The first six months of the financial year have been marked by significant operational change and progress. While certain challenges still remain the group has achieved an important turning point; there is, however, still further work to be done under Ian’s leadership. The completion of the restructuring at Severfield-Watson Structures and on-going operational improvements, combined with some signs of the UK market improving into 2014, gives me confidence for the future and the group’s ability to build on its strong market position.”
