Tough conditions see Billington search for different markets

After what the Barnsley-based company described as “without doubt the most difficult trading year in the history of the group”, Billington reported a £200,000 loss before tax in the six months to June 30.

This was an improvement on the first six months of 2011 when the group reported a £560,000 loss.

Billington’s chief executive Steve Fareham said the group is looking at alternative markets such as the rail sector, where there are opportunities to work on infrastructure projects such as building new footbridges, platforms and new stations.

Another possible area is energy from waste, where companies take waste and turn it into energy.

The group has also looked at a few other more specialised markets such as the water sector.

Billington’s profits were hit by redundancy costs of £300,000 after it switched from double shift to single shift operations at its factories in Barnsley and Bristol.

There were 85 redundancies, leaving the group with 320 employees.

Taking out the redundancy costs, the group made a trading profit of £100,000 in the six months to June 30.

“We’re in a far better place than we were last year,” said Mr Fareham.

“We’re cautiously optimistic. Hopefully we’ll see a real profit next year.

“We’re much smaller so we won’t be as volume driven. We can be more selective. We do feel more optimistic than we have done.”

There has been a marked reduction in demand for structural steel from 1.4 million tonnes four years ago to 800,000 tonnes as the economic slump has taken its toll on building projects, both private and public.

The group recently finished work on the England football team’s new home at Burton upon Trent.

The national football centre at St George’s Park will become the new training ground for the England football team.

Billington was responsible for the structural design of the project.

Analyst Matthew Davis, at house broker WH Ireland, said: “These much improved results, which nonetheless continue to reflect the challenges in the wider structural steel market, benefit from the capacity taken out of the business – around 85 people – in January 2012 and the transition to a single shift working pattern.

“Cost savings in respect of this should equate to around £2.8m in 2012.”

Mr Fareham said there have been a number of business failures in the steelwork contracting sector during the first half and he would be surprised not to see more in third and fourth quarters.