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Severfield boss upbeat amid jitters

The chief executive of the country’s only quoted steelwork contractor has said a nervous City is in danger of talking the industry into a recession.

Nearly £150 million was wiped off Severfield-Rowen’s share price back in January after it said it had seen a softening in some of its key markets.

The share price, which had been standing at £3.75, collapsed over 40 per cent to £2.13 and Tom Haughey said it was still recovering from the clobbering.

He blamed the problems on the City’s reaction to house building stocks and added: “The reaction in January was very disproportionate. The sentiment is that construction is softening because of the problems in house building and that is impacting disproportionately on other sectors.

“If you look at what contractors and engineers have been saying, they are much more content about the market in general than house builders.”

By way of explanation, he said the firm’s order book now stands at £455 million – up from last year’s £207 million – and Mr Haughey added: “That figure is locked in and is contractually signed. There is no speculation in there.”

A record set of results for 2007 was capped with by a 42 per cent rise in underlying pre-tax profits to £42.9 million.

Severfield-Rowen is due to begin work on the Heron Tower for Skanska in the City of London this summer and other big projects it will be starting over the next 12 months include a retail development in Aberdeen, the main Olympic stadium and a giant £75 million contract at Stratford, east London, where retail developer Westfield is building a shopping centre ahead of the 2012 Games.

Mr Haughey admitted the future of big office projects in the City was uncertain after the middle of next year but said power station work and retail would more than make up for any slack.

He said: “Power stations are quite steel intensive and there a number coming through. And we’re seeing a lot of what we call ‘transformational’ retail deals where town centres are being revamped.” Among those due for work are Leeds, Wolverhampton and Newport.

He added that hospitals continued to big consumers of steel while work in Northern Ireland – where last August’s acquisition Fisher Engineering hails from – was also strong.

The Severfield-Rowen board has also been re-jigged after Mr Haughey said it began to get unwieldy. Chairman Peter Levin, who has moved to Zurich in Switzerland, goes after 10 years in the post following next month’s AGM and will be replaced by City banker Toby Hayward.

And the previous 13-strong board has been cut down to three executives and four non-executives and will concentrate on City and investment matters. An executive committee, which will feature the heads of all its four divisions, will focus on day-to-day and strategic decisions such as identifying potential acquisitions.