Tom Haughey, chief executive of Severfield Rowen, will be hoping bad news comes in threes after announcing that falling construction demand, tightening margins and payment delays had all hit first-half results at the structural steel specialist. Underlying pre-tax profits slumped by over half from £3.4m to £1.5m and, given the dismal outlook in the UK, broker Peel Hunt slashed its adjusted pre-tax profit forecasts for the 12 months to 31 December by almost a third to £8m, giving EPS of 6.5p (from £10.1m and 8.1p in 2011).
There could be further shocks to come as the group announced a reorganisation of three of its steel divisions into one unit by the end of this year, which it hopes will move UK operating profit margins back towards 6 per cent from the current 1.7 per cent. However, it's not all doom and gloom as the order book was stable at £218m, providing full revenue visibility to the group's new March year-end, and the Indian joint venture JSW is expected to turn a profit in the second half. That unit has agreed a £7m investment to increase production capacity by over 50 per cent to meet demand.