Severfield wins £50m Google contract

Britain's biggest steel work contractor Severfield has won a landmark contract on the recently announced new Google Headquarters in King's Cross, London.
Severfield has worked on the retractable roof for Wimbledon No 1 CourtSeverfield has worked on the retractable roof for Wimbledon No 1 Court
Severfield has worked on the retractable roof for Wimbledon No 1 Court

It is thought the contract is worth around £50m and will be a major boost for Thirsk-based Severfield.

The group will provide 15,900 tonnes of structural steelwork services for the new 11-storey building with the work scheduled to commence on site in June 2018.

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Severfield's acting CEO Alan Dunsmore said: "We are delighted to announce that Severfield has been awarded this Google contract and are looking forward to working with Lendlease on such a high profile, iconic development at King's Cross.

"This contract win adds to our recently announced strong order book of £245m and supports Severfield's position as the market leader with unrivaled design, fabrication and construction capabilities."

The group has already worked on a number of key buildings in the King's Cross area, including 3 and 4 Pancras Square, King's Cross R1 and S2, and the new retail quarter Coal Drops Yard, which is currently under construction.

Analyst Greg Poulton at N+1 Singer said: "The company has previously indicated that the work would be worth around £50m in the order book.

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"Having recently upgraded our forecasts, we do not expect to make any further changes after this morning’s positive announcement. However, this clearly strengthens the order book in an end market (commercial offices) where there has been some uncertainty and also helps to underpin our 2019 and 2020 forecasts.

"The win once again demonstrates Severfield's market leading position with unrivalled design, fabrication and construction capabilities."

Severfield has said its full year results for this year will be "comfortably ahead" of expectations after it announced a 60 per cent leap in half year profits.

The group, which has worked on the retractable roof for Wimbledon No 1 Court, the new stadium for Tottenham Hotspur F.C. and the Shard, said it is on track to deliver its strategic goal of doubling pre-tax profits by 2020.

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Underlying pre-tax profit rose to £12.9m in the six months to September 30 and revenues rose 16 per cent to £137m.

The group has been hard at work at Wimbledon and Spurs, working around the sporting venues' summer tournament and football season.

​Mr Dunsmore said: "At Spurs we have been cracking on since the end of the season. They demolished the old stadium and we have been working on the South Stand so the roof lift can happen.

"We were back on site at Wimbledon in August and we will come off again for next year's tournament. It's a steady progress."

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​The group’s main activities ​are the design, fabrication and construction of structural steel​ ​for construction projects and more than 80 live projects were worked on during the ​half year.

These​ ​cover a wide range of sectors including commercial offices, stadia and​ ​leisure, transport, industrial and distribution and power and energy.

​Over the half year it worked on four large projects in London each of which have project revenues in excess of​ ​£20m. These are the new stadium for ​Spurs, the retractable roof for Wimbledon No.​​1 Court, a major new commercial head office building and a new commercial tower at 22​ ​Bishopsgate.

Other significant projects in the period included commercial office developments in​ ​London and outside (including Southbank Place, Shard Place, Kings Cross S2 and Snowhill), the​ ​Ordsall Chord railway bridges in Manchester and Ferrybridge Power Station.

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The ​group said its ​UK​ ​order book of £245m remains healthy with a good mix of projects and reflects the​ ​anticipated increase from th​e​ June position of £229m​.

​"​This leaves us well positioned to deliver good revenue performance both in the second half of the​ ​current year and into the next financial year​," said Mr Dunsmore.

​"The current order book, of which £216m is for delivery​ ​over the next 12 months, provides visibility of earnings and remains at a level which supports​ ​continued progress towards our strategic targets.​"​

Significant new orders secured in the period include a number of commercial office developments in​ ​London and in Cardiff, industrial and distribution projects for a variety of clients, two large data centres​ ​in Belgium and the Republic of Ireland and a pharmaceutical facility in the Republic of Ireland.

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​"​Encouragingly, the UK market continues to appear stable and the pipeline for potential future orders​ ​remains good​," said Mr Dunsmore.​

"​We've not seen any Brexit fall out."

The group recently finished work on the new London head office for Goldman Sachs.

The board has decided to increase the interim dividend by 29 per cent to 0.9p per share.