Severfield PLC on Tuesday saw its shares fall more than 35% following its swing to a loss in the first half of its current financial year.
The York, England-based structural steel maker said it swung to a pretax loss of £5.8 million during the six months that ended September 28, from a profit of £11.0 million the year before.
This was primarily due to a £20.4 million cost during the six-month period, related to a bridge remedial works programme. The firm is currently assessing further remedial costs.
Shares in Severfield were down 39% at 53.02 pence each in London on Tuesday afternoon.
Underlying pretax profit, excluding the bridge testing and remedial costs and £1.3 million in asset amortisation, rose 13% to £16.1 million from £14.2 million.
Revenue grew 16% to £252.3 million from £215.3 million, while operating costs increased 23% to £256.9 million from £203.3 million.
Severfield declared an interim dividend of 1.4p per share, unchanged from the year before.
Chief Executive Officer Alan Dunsmore said: ‘In the first half of the year, we have delivered further underlying profit growth and have secured some attractive projects which are reflected in our diversified order books. We continue to see some good projects coming to market; however, the predicted recovery in certain sectors has been slower than previously anticipated, and pricing has remained tighter for longer than expected.
‘In addition, a number of large project opportunities for financial 2025 and financial 2026 have been either delayed or cancelled and, given the current market backdrop, we remain vigilant to the increased risk of delay to expected orders in the short-term. Although the wider market backdrop continues to be challenging, our successful track record and diversified activities give us confidence in delivering the targets we have set for the medium-term.
‘Looking further ahead, we welcome the new government’s budget, which established a National Wealth Fund to invest in energy, transport projects and critical national infrastructure. We have a prominent position in market sectors with strong growth potential and are well-positioned to win projects in markets with positive long-term growth trends including in support of a low-carbon economy and those which are driving the green energy transition, providing us with a strong platform to fulfil our strategic growth aspirations.’
Looking ahead, Severfield expects full-year underlying profit to be below its previous expectations. It left its medium-term growth targets unchanged.
Broker Panmure Liberum forecast full-year revenue of £500 million, which would represent a 7.6% growth from £463.5 million last year, and pretax profit of £27.0 million, up 16% from £23.0 million.
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