Severfield-Rowen's results were notable for its management's very downbeat assessment of the outlook for next year. The company is having to come to terms with a major fall in demand for its steel products from the commercial construction sector and, in response, management has drawn up plans for cost reduction, expanding foreign sales and has already signalled a cut in next year's dividend.
While 2009 is likely to prove a successful year for Severfield, project timing will be the group's achilles heel as it enters 2010. The forward order book stands at a relatively strong £256m, but many of its projects are due to finish this year and there have not been enough new contract wins in the UK to offset this, and many new contracts are significantly smaller. That said, the company continues to sell steel products to the Olympics and large building projects such as the shard of glass at London Bridge. Chief executive Tom Haughey says Severfield is looking to expand foreign exports to offset weakness in the UK. And to that end Severfield now has a joint venture in India and has opened a project office in Abu Dhabi, where demand for steel products from the oil & gas industry has remained buoyant. Management is looking for cost savings in the UK and will announce a plan after consultation with employees.
RBS forecasts pre-tax profits of £45m, with EPS of 35.6p, falling to £15m and EPS 12p in 2010.
| ORD PRICE: | 195p | MARKET VALUE: | £173m | |
| TOUCH: | 191-195 | 12-MONTH HIGH: | 279p | LOW: 118p |
| DIVIDEND YIELD: | 10.3% | PE RATIO: | 6 | |
| NET ASSET VALUE*: | 145p | NET DEBT: | 10% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 173 | 20.0 | 15.7 | 10.0 |
| 2009 | 200 | 24.8 | 19.7 | 10.0 |
| % change | +16 | +24 | +25 | - |
Ex-div: 30 Sep Payment: 23 Oct *Includes intangible assets of £82m, or 92p a share | ||||
