黑洞社区

Steelwork giant Severfield expects further growth in profitability after posting a return to profit in a solid set of half-year results today.

Chief executive Ian Lawson told 黑洞社区 he expected the firm鈥檚 profitability to 鈥渃ontinue to improve鈥� over the coming months, after the firm posted pre-tax profit of 拢1.7m for the six months to 30 September 2014, up from a 拢2.7m pre-tax loss for the same period last year.

The return to profit was underpinned by growth in the firm鈥檚 UK underlying operating margin to 3.7%, up from 2.5%, while the firm鈥檚 share of losses from its Indian joint venture reduced to 拢0.3m, down from 拢1.3m.

Lawson said: 鈥淭his is a positive set of results and we expect sustainable profit and margin growth.鈥�

Severfield鈥檚 revenue for the period contracted 17% to 拢97.4m, down from 拢117.1m.

The firm noted that once 拢1.3m of exceptional amortisation costs were stripped out of the results, it posted an underlying pre-tax profit of 拢3m.

The return to profit comes after a tough period of trading for the firm. Severfield posted a pre-tax loss of 拢4.1m in its full-year results to 31 March 2014, down from a 拢28.9m pre-tax loss over the 15 months to 31 March 2013.

Severfield鈥檚 拢28.9m pre-tax loss over 2012-13 included 拢20.1m of cost overruns on problem contracts, including a 拢10m write-off on 122 Leadenhall tower in London, known as the Cheesegrater, leading to a series of profit warnings and the exit of Lawson鈥檚 predecessor Tom Haughey.

Lawson confirmed Severfield鈥檚 UK business is now taking a 鈥渕ore disciplined approach to tendering鈥� to avoid similar problems on contracts.

He said: 鈥淚t鈥檚 about actually managing the risk properly. We鈥檝e got processes in place so that we fully appraise the risk we鈥檙e taking on.鈥�

Lawson said the commercial, transport, industrial and data centre sectors were all 鈥渓ooking positive鈥� for the firm.

Major contracts won during the half-year period included London commercial office developments at Principal Place and Angel Court, and the Ordsall Chord link bridge project between Manchester Victoria and Piccadilly stations (pictured).

The firm鈥檚 UK order book stood at 拢185m on 1 November 2014, up from 拢168m on 1 May 2014, while the India order book reduced slightly to 拢38m, down from 拢41m.

Lawson said the firm is 鈥渁ssisting鈥� with an investigation into the breakage of two steel bolts on the Cheesegrater tower earlier this month, which is being carried out by developer British Land, contractor Laing O鈥橰ourke and engineer Arup.

He said there was 鈥渘o suggestion at this time鈥� that Severfield would face any liability for the breakages.