Structural steel group aiming to boost its turnover by 10%

Dec 15 2007 by Chris Knox, The Journal

A RECORD order book of £405m is set to help a North structural steel group increase its multi-million pound turnover by around 10%.

Severfield-Rowen has managed to grow its order book by £105m since the half-year stage, which will provide it with work well into 2009.

The North Yorkshire plc, which helped build Gateshead Millennium Bridge and Durham’s Gala Theatre, said its recent £90m acquisition of Northern Ireland-based construction steel fabricator Fisher Engineering had also helped the group boost its turnover, which is expected to increase by 10% from last year’s figure of around £300m.

In a trading statement, Peter Levine, chairman at Severfield-Rowen, said: “The record order book and high level of demand for our unique, wide-ranging services and capabilities demonstrate the excellent prospects of the group.

“With the Fisher Engineering acquisition already proving a success, we remain very confident about the outcome for this year and beyond.”

The business is hoping to extend its impressive order book further by wrapping up a deal with retail group Westfield Shoppingtowns Limited, for which it hopes to provide structural steel as part of a new shopping complex in West Yorkshire.

The deal would be the second biggest contract in the firm’s 30-year history after its involvement with Heathrow’s Terminal Five project earlier this year.

Tom Haughey, the group’s chief executive, said: “Our objective is continued growth, not just in our number of orders but in staff development.

“It’s all about retaining the quality of our production.” To help retain this quality, the group is looking to build on its 15,000-strong workforce as well as continue a multi-million pound investment programme.

Jonathan Hurn, analyst at stockbroking and advisory house KBC Peel Hunt, said: “While short in length the sentiment is positive”, adding that Severfield is trading on 10.9 times 2008 consensus earnings verses the sector on 13.4 times.

Severfield said last April it was looking for acquisitions and that robust markets and strong demand had helped push its order book to a record £207m. It said the acquisition should allow for economies of scale and Fisher Engineering’s experienced management team would be kept.

The company is now working on Heathrow’s Terminal 5 and hopes to play a part in the construction of the 2012 Olympic stadium in east London.

It said demand for steel structures was strong as it posted a 54% rise in annual pre-tax profits to £30.3m on sales up 24.7% to £295.1m earlier this year.