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.
SEVERFIELD ROWEN (SFR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 137p | MARKET VALUE: | £122m | |
| TOUCH: | 136-137p | 12-MONTH HIGH: | 220p | LOW: 130p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 145p* | NET DEBT: | 22% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 122 | 2.05 | 1.18 | 1.5 |
| 2012 | 136 | 0.25 | 0.18 | 1.5 |
| % change | +11 | -88 | -85 | - |
Ex-div: 1 Oct Payment: 26 Oct *Includes intangible assets of £72m, or 80p a share | ||||
