Severfield-Rowen produces pre-tax profit of £43m

Severfield-Rowen, structural steel group, made a pre-tax profit of £43m last year which represents a margin of 10.8%.

Turnover was 31% higher at £390m.

Severfield’s latest figures cover the 12 months to 31 December 2008.

Turnover in the previous year ran to £300m and Severfield made a margin of 12.7% as the profit in 2007 ran to £38m.

The latest profit would have been higher but for the toll of ‘other items’, the two main elements of this being listed as:

• £9m – the amortisation cost of “acquired intangibles” in respect of the acquisition of the Fisher business
• £700,000 - losses on derivative financial instruments

Explaining the latter, Severfield said: “The group, particularly through Fisher Engineering, contracts in to the euro zone (principally Eire) and fixes the contract profit by locking in the exchange rate at the time of accepting this work.” 

That causes a hiccup due to the weakening of sterling against the euro between the date when the forward exchange contracts were put in place during the year and the year-end.

Tom Haughey, chief executive, said: “Severfield-Rowen has produced record underlying results which confirm the company's market leading position in the sector.

“At £311m, our order book remains healthy and represents almost one year's turnover. 

“The make-up of the order book has changed reflecting new business in many diverse UK sectors, including health, education and power.

“While some key traditional sectors in the UK have declined significantly in scale, the company is confident that its strategy of increasing domestic market share and developing export sales, despite some pressures on margins, will position it well for the future.”

Joint venture operations will be commissioned in India during 2010, provide “an exciting platform for growth” added Haughey.

In the second half of 2008, production and overhead cost reductions were made across the group providing annual savings going forward of £3m.

India

The business plan for the new company, JSW Severfield Structures, is based on replicating many of the strengths which have been realised in the UK.

Business Investment

Several investments were made in 2008, adding to the significant investments made in all locations in recent years.

At Severfield-Reeve Structures in Dalton, new, high speed processing equipment was installed in two lines and logistical traffic and storage improvements were made.

A new business division was created at Atlas Ward in Sherburn, to produce structural steel staircases and light steel, which was supported by new investment. The projected annual turnover is now £4m, which previously would have been subcontracted to companies outside of the group.

Investments at Watson Steel Structures, Bolton and Fisher Engineering near Enniskillen, were made to improve site accommodation, storage, handling and logistics.