Severfield’s buoyant order book sends shares soaring

SHARES in Severfield-Rowen shot up last night as the structural steel company reported strong order books despite the tough UK market.

The Thirsk-based company’s stock rose nearly 16 per cent, a rise of 24.25p, to close at 179.25p.

Chief executive Tom Haughey said the UK market will be “tight and difficult” over the next few years.

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“The UK recovery is still a few years away, around three years away,” he said. “But we are engaging in a healthy mix of work in the period between now and then.”

Severfield’s most prestigious piece of recent work has been the London 2012 Olympics site.

Severfield’s subsidiary Watson Steel Structures provided 10,600 tonnes to form the spine of the 80,000-seat stadium. It also supplied the steel for the Basketball Arena. The 1,000-tonne project took eight weeks.

But Mr Haughey said the group’s £230m order book includes virtually no Olympic work.

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“Many people thought we were sheltered by the Olympics, but we’ve still got an impressive order book. We are virtually offsite now, we’ll be gone in the next couple of months,” he said.

Severfield’s other high profile contracts include the Arcelor Mittal Orbit at the Olympic Park, the 115m tall sculpture which is the largest piece of public art in the UK. Severfield supplied 1,670 tonnes of steel to the project.

It is also supplying the steel for the Leeds Arena and Trinity Leeds shopping centre.

Severfield said the trading performance and financial position for the year to date are in line with management expectations and are supported by “impressive order books in both the UK and India”.

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The company’s debt levels are also in line with expectations.

While Severfield remains cautious about the UK outlook it said it will plan on the basis of subdued demand and relatively tight pricing.

It added that in recent weeks two more competitors have ceased trading, which supports its view that a supply and demand rebalance is continuing.

Barrett Steel Buildings in Bradford and Robinson Construction in Derby have both gone to the wall. But Severfield has no interest in buying up any of the assets, having reduced its capacity output last year.

The UK order book of £230m is up from £220m 12 months ago.

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The group’s Indian business is performing strongly with an order book of £61m, up from £40m at the end of August.

“The other positive next year is India,” said Mr Haughey. “We’ll make some progress in the tough UK market and better progress in India.” Severfield said demand and prospects in India remain “very positive”.

“Our value offering, of design enhancement, volume manufacturing, product accuracy and rapid site erection, is gaining increasing traction with clients, which has translated into a growing order book,” said Mr Haughey.

Indian factory output levels and productivity have improved and the plant recently appointed Kevin Campbell, as its new head of operations.

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Severfield pleased the market with the news that it has negotiated new banking facilities with effect from November 11.

The new facilities, with Yorkshire Bank and Royal Bank of Scotland include a £50m revolving credit facility for five years, to November 2016.

Helping to build the cheesegrater

Severfield-Rowen has won the steelwork contract for the new Cheesegrater skyscraper in London.

It won the contract on The Leadenhall Building from contractors Laing O’Rourke.

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The steelwork programme is due to complete in 2012. No value was put on the contract.

The 52-storey, 736ft (238m) tower was designed by architects Rogers Stirk Harbour and Partners and Arup for landlords British Land and Oxford Properties.

The development is set to become one of the tallest buildings in the City of London.

Its 610,000 sq ft tower will feature a tapered glass facade on one side to display steel bracings, as well as a complex ladder frame and the building’s base will feature a 30m-high atrium.

“Leadenhall Street is a significant contract award for Severfield-Rowen and will be produced across all of our four manufacturing facilities in the UK,” said chief operating officer Peter Emerson.

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