Engineering firm Sheffield Forgemasters International has posted an increase in profitability as it launches a transformation programme to diversify into new sectors.
Forgemasters grew its pre-tax profit to £2.1m during 2018, up from £200,000 in 2017, and entered this year with an order book of £160m.
Much of the growth has come from improved pricing and successes in the UK defence sector.
The firm shrank its debt by £11.5m to £20.3m and extended its lending facilities with Wells Fargo until April of next year.
The company has also indicated that it wants to achieve significant reductions in its debt over the next three years.
Last year saw Forgemasters bring in a new management team led by chief executive David Bond.
We have a huge amount of nous around the world of complex steel. I think it is a world-renowned group.David Bond
Speaking to The Yorkshire Post, Mr Bond, inset, said: “2018 was a progress year and a step in the right direction in terms of performance. Encouragingly, we have reduced debt.
“We have got a good order book, particularly around UK defence. Our focus is now on securing business outside of UK defence.”
Specifically, Forgemasters is looking at the global defence market, as well as civil nuclear and the renewables markets.
“We are seeing more activity in those areas,” Mr Bond said.
Chief finance officer Steve Hammell said that the firm had increased some of its inventory in preparation for a ‘no deal’ Brexit, but added that it did not expect any major disruption if the UK failed to reach a withdrawal agreement with the EU.
“If you look at our trade into the EU, most of the products we supply are work rolls.
“That is a segment where we have taken an intentional decision to boost our margins.
“In terms of the potential impact of the introduction of tariffs from any form of Brexit which may happen in the future, we regard the impact as being relatively modest by comparison to the pricing changes we ourselves have implemented.
“We would expect there to be a small impact if tariffs were introduced but, in all honesty, we have already made the decision to introduce much better pricing for the products we supply into EU member states.
“We have taken a small number of precautions. We are not exposed very heavily in terms of our own supply chain to EU suppliers and do not expect any major disruption if there were a hard Brexit.”
He added that the imposition of tariffs by the US Government again was having little impact on the firm, with the majority of the products it supplies being exempt from such tariffs.
Last year, Forgemasters took on a additional 33 apprentices and now employs 680 staff.
On the transformation programme, chief operating officer Paul Cahill, who is leading the programme, said: “It’s a wide-ranging programme, building on our renowned strengths, to ensure we have the right capabilities and levels of operational performance to succeed in the long term.”
Sheffield Forgemasters can trace its roots back to the early 19th century and played a key role in establishing Sheffield’s international reputation as a steel-making powerhouse.
Mr Bond said that the heritage of the business weighed heavily on the decisions he and the team were taking to ensure its longevity.
“We have a huge amount of nous around the world of complex steel. I think it is a world-renowned group. It allows us to take on things that other steel companies frankly cannot. Our future lies in the intellectual capacity.”