Suddenly, Severfield (SFR) an income play. Factor in the 1.7p special payout and the structural steel specialist is yielding upwards of 5 per cent. Increased shareholder returns aren’t necessarily linked to improved performance, but an 80 basis point increase in the underlying operating margin reflects a disciplined approach to working capital management. This good housekeeping is also apparent in the £10m reduction in receivables, while year-end net cash crept up despite a £5.5m equity investment in the Indian joint venture.
The UK order book stood at £237m at the start of June, the bulk of which will be delivered over the next 12 months. At the end of 2017, the Yorkshire-based group was contracted to supply 15,000 tonnes of structural steelwork for Google’s new London headquarters in King's Cross. Other high-profile projects undertaken though the period include Tottenham Hotspur’s new stadium and the retractable roof for Wimbledon No.1 Court, but a dedicated business unit - Severfield (Products & Processing) – was recently established with the aim of securing smaller-scale projects. Meanwhile, the order book for the JSSL Indian subsidiary has hit a record £106m, a 45 per cent increase year on year.
Bloomberg consensus EPS for March 2019 comes in at 6.7p, against 6.0p in FY2018.
| SEVERFIELD (SFR) | ||||
| ORD PRICE: | 85p | MARKET VALUE: | £257m | |
| TOUCH: | 83.2-86p | 12-MONTH HIGH: | 88p | LOW: 59p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 56p* | NET CASH: | £33m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 231 | -4.1 | -0.9 | nil |
| 2015 | 202 | -0.2 | 0.1 | 0.5 |
| 2016 | 239 | 9.6 | 2.9 | 1.5 |
| 2017 | 262 | 18.1 | 5.1 | 2.3 |
| 2018 | 274 | 22.2 | 6.1 | 2.6 † |
| % change | 5 | +23 | +18 | +13 |
| Ex-div: | 16 Aug | |||
| Payment: | 14 Sep | |||
*Includes intangible assets of £54.8m, or 18p a share †A special dividend of 1.7p has been announced, giving a total cash return of 4.3p a share (same dates apply). | ||||
