Rising steel prices contributed to solid half-year returns for Severfield (SFR), and a 230 basis point increase in the underlying operating margin shows the company's focus on working capital management and other operational efficiencies is paying off.
Excluding fair value effects and amortisation, underlying pre-tax profit was up 59 per cent to £12.9m, while operating cash flow before working capital movements came in at £14.1m for the period, against £10.6m at the 2016 half year. Soon, the repayment of debt linked to Severfield’s Indian joint venture should also spark a slight uptick in profitability.
Along with higher prices, margins were helped by an increase in production activity though the period. And the group is set fair on the UK order front, with a backlog of £245m at the beginning of November 2017 (up from £229m five months earlier), of which £216m is for delivery over the next 12 months.
Broker N+1 Singer gives adjusted pre-tax profit of £21.2m for the March 2018 year-end, leading to EPS of 5.9p, against £19.8m and 5.5p in FY2017.
SEVERFIELD (SFR) | ||||
ORD PRICE: | 70p | MARKET VALUE: | £210m | |
TOUCH: | 69-71.5p | 12-MONTH HIGH: | 88p | LOW: 59p |
DIVIDEND YIELD: | 3.6% | PE RATIO: | 11 | |
NET ASSET VALUE: | 53p* | NET CASH: | £31.3m |
Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
30 Sep | (£m) | profit (£m) | share (p) | per share (p) |
2016 | 118 | 7.4 | 2.07 | 0.7 |
2017 | 137 | 11.5 | 3.14 | 0.9 |
% change | +16 | +55 | +52 | +29 |
Ex-div: | 14 Dec | |||
Payment: | 12 Jan | |||
*Includes intangible assets of £54.9m, or 18p a share |