Structural steel supplier Severfield-Rowen's (SFR) has had a disastrous 15 months, peppered with profit warnings and cost miscalculations on various contracts - including 122 Leadenhall Street, its biggest job in years. Strip out £7.3m of one-off costs and Severfield still lost £21.5m. Business remains highly competitive, too, although a £45m rights issue completed in April, and new banking facilities, have repaired the balance sheet and management predicts a modest return to profit this year.
Progress has been made. Those not committed to change have left, other jobs have been lost and capacity taken out. Reorganisation will save over £4m a year and further changes should mean more cost trimming in the next 12-18 months. "We're in a much better place now," says chairman John Dodds who is "quite enjoying" running the business while hunting down a new chief executive. Two offers have already been turned down. Crucially, Severfield's estimating, risk management and contracting processes are being scrutinised and updated to avoid another Leadenhall situation. A UK order book worth £197m looks steady, too, and there's none of the suicidal bidding that's sent rivals under. That should help return operating margins to at least 5 per cent in time, says Mr Dodds, who tips Severfield to win a big slice of the work on new generation UK power stations. In India, delays continue to dog the Indian joint venture, which lost Severfield £0.3m.
SEVERFIELD-ROWEN (SFR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 49p | MARKET VALUE: | £139m | |
| TOUCH: | 48.5-49p | 12-MONTH HIGH: | 91p | LOW: 31.8p |
| DIVIDEND YIELD: | 3.1 | PE RATIO: | na | |
| NET ASSET VALUE | 115p* | NET DEBT: | 40% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 394 | 42.6 | 27.1 | 20.0 |
| 2009 | 349 | 44.1 | 35.3 | 15.0 |
| 2010 | 267 | 11.1 | 8.58 | 7.50 |
| 2011 | 268 | 6.78 | 6.52 | 5.00 |
| year to 31 Mar | (£m) | (£m) | (p) | (p) |
| 2013† | 318 | -28.9 | -25.9 | 1.50 |
| % change** | -5 | - | - | -76 |
*Includes intangible assets of £69.8m, or 78p a share †15-month period **Annualised †Half-year dividend only | ||||
