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Severfield profits drop by two thirds

Severfield Rowen’s pre tax profit fell by two thirds in the first six months of 2011 compared with the same period last year.

The structural steelworks firm said it is trading well and in line with expectations despite the ‘long and severe UK downturn’. Its pre tax profit dropped from £6.3 million to £2m, with revenue down 6 per cent from £126.7m to £122m.

The company has maintained its domestic market share at 20 per cent, with an order book value of £249m by the end of last week.  Net borrowings rose from £8.2m to £22.8m.

Chief executive officer Tom Haughey said the performance in terms of revenue and margin is consistent with expectations.

He said: “The company has been consistently cautious about the timing and extent of recovery in the UK market, an approach which has been justified.

“The company is forward planning on the basis that demand will remain subdued for the next few years, showing only marginal growth for the market as a whole but with further opportunity in the London commercial, power and industrial/distribution sectors.

“A few select export projects from the UK have been engaged or are being pursued, but exports will remain a small proportion of turnover in light of the prevailing returns in many overseas markets.”

Projects in the first half of 2011 have included the Shard skyscraper, London, along with Heathrow Terminal 2A and 2012 Olympic Basketball Arena. New orders in 2011 include The Leadenhall Building, also known as the Cheesegrater, Sellafield SDP and Birmingham New Street Station.

In the UK, revenue of £122m was 4 per cent down on 2010 (£126.7m). Underlying operating profit was at £5.7m (2010: £8.5m), down 34 per cent due to “order mix change” over the period. 

The firm is focusing its growth opportunities on India, through JSW Severfield Structures. The company said while the Indian order book has built up to a good level - at £41m by the end of last week - contract timing has resulted in the factory production build up running about three months behind schedule, resulting in a £1.6m loss for the period.

The company has also announced that Toby Hayward is stepping down from his role as non-executive chairman from 1 September, but will remain a non-executive director and will chair the company’s audit committee.  John Dodds, currently a non-executive director, will take over as non-executive chairman

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