Severfield in a strong position despite Covid uncertainty

Severfield, Britain’s biggest construction steelwork contractor, said it is cautiously optimistic about the 2021 financial year despite the current market uncertainty caused by Covid-19.

Severfield is working at Lord’s Cricket Ground on the Compton and Edrich stands

The Thirsk-based group said its optimism stems from the strength of its order book, an encouraging pipeline of opportunities, a strong balance sheet position, its expertise in managing complex projects and its long-standing client relationships.

The firm told shareholders at its AGM: "We continue to be well-placed to win work in the diverse range of market sectors and geographies in which we operate and across a wide client base, providing us with extra resilience and the ability to increase our market share."

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The board is recommending a final dividend for the year to March 31 of 1.8p per share, making a total for the year of 2.9p per share, up from 2.8p last year.

Severfield's chief executive, Alan Dunsmore, said the dividend payment reflects the board's confidence in the future.

"It reflects the strong balance sheet. We had a good year last year. The dividend reflects that," he said.

Severfield said its UK and European factories are fully operational, all construction sites are open and underlying operations are performing well.

Its UK and Europe order book now stands at £270m, down just slightly from £271m on June 1.

The firm said tendering and pipeline activity remain encouraging despite some client investment decisions being deferred.

Severfield recently completed its work on the redevelopment of Lords Cricket Ground (the Compton and Edrich stands) and it is now working on a number of high profile contracts, including the new Google Headquarters at King’s Cross.

Severfield told investors that it responded quickly and decisively to the Covid-19 pandemic and it has coped well with the challenges presented by outbreak.

All of its factories and sites have implemented new operating procedures, in accordance with Government and industry guidance, including changes to working practices, enhanced levels of cleaning, additional hygiene facilities and social distancing.

Mr Dunsmore said: "The procedures involve distancing on site and in factories, regular cleaning and hand sanitisers.

"We are following the guidelines. We are really safety conscious."

The firm said the disruption caused by Covid-19 has impacted profitability, particularly in the first quarter of the 2021 financial year.

"Notwithstanding this, overall activity levels have continued to increase since the beginning of the lockdown and our operations are currently performing well, with activity levels returning to pre-lockdown levels in the second quarter of 2021," the firm said.

"Our clients have continued to regularly place orders... providing the group with a strong future workload during the current period of Covid-19 related uncertainty."

The group said it is encouraged by the current level of tendering and pipeline activity across the group, despite evidence of some investment decisions being delayed.

"We certainly saw between half a dozen and a dozen delays," said Mr Dunsmore.

"There's still quite a lot of uncertainty, but we are still winning work and we remain cautiously optimistic."