Severfield sees revenues soar amid new contract wins

The Thirsk-based group said revenues rose from £132m to £186m in the six months to September 30 and underlying pre-tax profits rose 3 per cent to £8.4m despite the impact of Covid-19.

The group's UK and European factories are fully operational, all of its construction sites are open and it said underlying operations are performing well.

Alan Dunsmore, chief executive of Severfield, said: "The resilience provided by our market sector, geographical and client diversity, together with the actions that we have taken to date have enabled us to navigate well through the challenging conditions of Covid-19.

"This has resulted in a strong operational performance in the first half of the year. We have a strong balance sheet, good visibility of future earnings from our order books and pipelines, and a strong reputation for delivery of complex projects for our long-standing clients."

He said there is now greater clarity of the extent of the impact of Covid-19 on the current year’s performance and, on the assumption of no further significant business interruptions arising from any widespread and prolonged secondary lockdown, the firm expects to improve upon its first half profitability in the second half.

It has been awarded over 80 projects during the first half in diverse market sectors including industrial and distribution, data centres, nuclear and commercial offices. The projects include work on the new Woodsmith polyhalite mine on the North Yorkshire coast.

Good cash generation resulted in period-end net funds of £19.5m, including the outstanding acquisition loan of £10.5m for Harry Peers.

The group said an interim dividend of 1.1p per share reflects its confidence in the outlook.

"Our cash flow has been strong in the last six months," said Mr Dunsmore.

"The balance sheet remains very strong, the order book remains very strong and we're quite optimistic about the pipeline. We're quite positive and optimistic about the future."

Severfield's UK and Europe order book stood at £287m on November 1, up from £271m on June 1, and it includes new nuclear orders secured by Harry Peers.

Mr Dunsmore said that tendering and pipeline activity remain very encouraging despite more competitive pricing and some client investment decisions taking longer than normal.

The group said that any disruption related to the new UK lockdown restrictions is not expected to be material to its full year profitability and it is optimistic about the outlook beyond 2021, based on order book strength, an encouraging pipeline, a strong balance sheet position, its expertise in managing complex projects and its long standing client

relationships.