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Severfield pays out as cash swells in line with infrastructure demand
Structural steel manufacturer Severfield sees a stable market in the UK, predicting modest growth thanks to a good pipeline of potential future orders.
Severfield, which is contributing products to those constructing Tottenham Hotspur's new stadium, posted a 5% increase in revenue to £274.2m for the trading year to 31 March, while underlying profit jumped 19% to £23.5m and pre-tax profits moved ahead 22% to £22.2m.
Severfield highlighted a "strong" cash performance, closing out the period with net funds of £33m after a £5.5m equity investment in an Indian joint venture.
The London-listed firm pointed to numerous significant projects that are carrying over into the new financial year, such as the Spurs stadium, a retractable roof over Wimbledon's No 1 court and a new commercial office tower at 22 Bishopsgate, plus a pipeline that includes commercial offices, data centres and infrastructure. It noted that there was a considerable desire for data centres and industrial orders in particular, including two Amazon warehouses.
Among the 100 or so projects with which it was involved during the year, Severfield was also awarded a £50m project for Google back in December and will supply the tech giant with 15,000 tonnes of structural steelwork for its new eleven storey head office building.
As of 1 June, Severfield's UK order book was sitting at £237m, but the company was continuing to look further ahead, specifically eyeing off UK government projects, ranging from HS2 stations and bridges, all the way to a potential expansion of Heathrow airport.
The order book, of which £200m is for delivery over the next 12 months, remains in line with normal levels, which typically equate to eight to ten months of annualised revenue. "This provides us with good visibility of earnings into the next financial year and supports continued progress towards our strategic targets." Further forward, the company reported seeing growing demand from Ireland, where it has historically had a strong presence.
Severfield upped its total dividend for the year by 13%, with a proposed final dividend of 1.7p per share taking the annual dividend to 2.6p.
As of 1040 BST, Severfield shares had grown 5.29% to 86.12p.