A show of steel from Billington

STRUCTURAL steel group Billington Holdings is set to return to the black this year after successfully diversifying into new growth areas such as rail and energy.

Reporting an underlying loss of £100,000 for the year to December 31, an improvement on the previous year’s £1.7m loss, Billington said it expects the market to slowly pick up this year ahead of two to three per cent growth in 2014.

Despite this expected improvement, the Barnsley-based group is assuming the tough conditions of the past few years will persist.

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With this in mind it has entered a number of new areas and has secured contracts in transport and energy.

Chief executive Steve Fareham said: “We have a growing expertise in rail and energy. We’re pitching for a number of contracts and we’re also working directly with Network Rail.”

The group won two rail contracts in 2012. These included a new concourse and bridge across the East Coast mainline at Wakefield Westgate station and introducing disabled access at Thornton Heath station including a bridge with lifts and ramps to provide disabled access to all platforms.

It is also working in the energy sector and has won a new contract with Drax Power Station in North Yorkshire.

The group’s Billington Structures division will supply a new pipe bridge at the power plant in Selby as part of Drax’s plans to convert three of its six generating units to burn sustainable biomass in place of coal.

This will transform the business into a predominantly biomass-fuelled generator delivering low-carbon, low-cost and reliable renewable power.

In addition to these new areas, Billington is pulling away from the competitive market to focus on more niche, added value, complex work.

“We’re trying to be more selective and take on contracts where we can add value,” said Mr Fareham. Analyst Matthew Davis at WH Ireland has pencilled in pre-tax profits of £400,000 in 2013, rising to £1m in 2014.

Last year’s strategic review saved the group £3m in cost savings a year.

Billington made 85 redundancies during the first six months of the year, leaving the group with 320 employees. It also switched from double-shift to single-shift operations at its factories in Barnsley and Bristol.

The group said there are no plans for any further redundancies.

Revenues fell from £54m to £38m following the decision to revert to a single shift working pattern in order to match production levels with market demand.

The group said it remains committed to paying a dividend and while the results show a considerable improvement over last year, the net result is still a loss and it will not be paying a final divi-dend.

Billington said the results from its Peter Marshall Stairs subsidiary were disappointing. It has appointed a new managing director designate who is carrying out a full review of the company’s operations.

The easi-edge safety barrier division also had a tough year with reduced demand for its barriers.

There were changes to the management team during the year and the group is seeing a gradual increase in demand for barriers.

Analyst Matthew Davis, at WH Ireland, said: “While the company has not been immune from the multi-year industry downturn, judicious decision-making, coupled with a robust balance sheet, has enabled Billington to ride it out.

“The company is now poised to benefit from any sustained market improvement with management reporting an improved order book, both in terms of value and quality, in the core structures business.”

Billington said that 2012 was difficult for the sector with the UK structural steelwork industry continuing to flat line at around 800,000 tonnes a year, almost half of the peak of five years ago.

2012 saw further reductions in capacity as competitors failed and consolidated, a trend that Billington sees continuing in 2013 as the industry continues to rebalance the supply/demand equation.

Referring to Yorkshire-based rival Severfield-Rowen, Bilington said confidence in the sector has been adversely affected by a series of negative trading statements from the market leader, the only other London listed comp- etitor.

“Against this trading backdrop, our planned reductions in production and manning levels, coupled with a complete review of our business processes, has enabled the group to make significant progress towards its mission of stability and a return to profitability,” said Mr Fareham.

Over 15,000 tonnes of structural steel was made on a single shift basis at Billington’s two factories in Barnsley and Bristol during 2012.

Key projects included the completion of St George’s Park, the new training centre near Burton on Trent for the Football Association, the new stand for Saracens RFC and a major facility for West Yorkshire Police.

The group also produced steel for educational facilities in Sheffield, Rochdale, Kings Lynn, Blackpool and Stoke and a retail development at Bicester town centre.

The group’s core Billington Structures division started 2013 with a strong portfolio of work including footbridges and a new station in the rail sector, a major plant in Plymouth in the waste to energy sector and the first Olympic legacy project at Derby Arena.

It was given the Structural Steel Design award for its work at the Royal Shakespeare Theatre.