Recovery still distant, warns Severfield

STRUCTURAL steel group Severfield-Rowen told shareholders at its annual general meeting yesterday that a broad recovery in the UK market remains distant.

The Thirsk-based company said the focus continues on a number of sectors where there is activity and opportunity, notably in industrial, transportation, waste to energy and commercial offices.

The company said it remains optimistic about prospects and development potential for its joint venture in India.

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Severfield-Rowen believes the economy will see little sign of improvement this year and only a slight pick-up next year.

The UK’s biggest structural steel supplier, which has worked on projects including London’s 2012 Olympic Stadium, said demand remains relatively low with big construction projects scarce.

The company is also battling soaring steel and energy prices. Steel prices have been driven up by floods in Australia and surging Asian demand.

Severfield-Rowen said prices are tight, but have improved “marginally” compared with 2009, as it is able to force through some of the steel price increase to customers.

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It believes trading conditions will improve only marginally towards the end of the year, before better opportunities materialise in 2012.

“Look at all the forecasts and our discussions: it’s all pretty flat and it’s just that bit of glimmer for 2012 but not necessarily that strong, ” said chief executive Tom Haughey.

“We’re looking at a very minor increase in 2012 and then probably a minor increase in 2013. There are sectors within that that are a bit warmer or a bit colder.

“Overall, it’s relatively flat and not tremendously exciting.”

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Severfield-Rowen said it is focusing its attention on sectors where activity and opportunity are being sustained.

The group’s order book was down slightly at £221m from £226m at the end of March, which should ensure all four of its factories have a healthy workload until September.

Its industrial pipeline includes winning an extension to a BMW car factory near Oxford, work on a paper mill, plus various warehousing jobs.

In transport, projects include airport schemes plus work on the London Crossrail scheme. Waste-to-energy prospects include an unnamed large power scheme in the Merseyside area, thought to be a project for conglomerate Peel Holdings.

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In London the group is bidding for work on projects including the Leadenhall ‘Cheesegrater’ and the Walkie Talkie skyscraper.

Severfield-Rowen said its trading performance and financial position are in line with its expectations.