Severfield launches buyback as booming steel demand in UK and Europe powers record backlog

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The acquisition of Voortman has helped the firm diversify from its home market in the UK, with 32 per cent of its order book now located in Europe.
The acquisition of Voortman has helped the firm diversify from its home market in the UK, with 32 per cent of its order book now located in Europe.

Severfield, the structural steel producer, has reported a record order backlog in its key markets as the demand for structural steel in major infrastructure projects has boomed.

In a trading update issued ahead of full-year results, which are scheduled to be published on 19 June, the company told the market today that it now expects to deliver a result for the year that’s ahead of current market expectations.

The company said it had “continued to secure a significant value of new work” in its UK and European markets, which had left it with an order book of £511m at the beginning of April. Of the total, £397m is for delivery over the next 12 months.

The acquisition of Voortman has helped the firm diversify from its home market in the UK, with 32 per cent of its order book now located in Europe.

Severfield said it is well-positioned for continued growth in these markets and to meet the ongoing demand for infrastructure investment. It added the growing focus on major projects “which can mitigate the impacts of climate change and deliver energy security,” such as Sizewell C, HS2 and Northern Powerhouse Rail, would provide it with a steady stream of work in the years ahead.

Meanwhile, the company’s Indian arm also continued to perform well. Its output is “likely to exceed 100,000 tonnes, including sub-contracted work, for the second year running,” and its order book was £142m at the beginning of April, compared to £165m at the beginning of November last year.

Off the back of these positive results and the company’s upbeat outlook, management said the company will return £10m to shareholders via a share buyback.

Severfield said: “The group’s capital allocation priorities are to support its ongoing operational requirements and profitable organic growth opportunities, to pay sustainable core dividends to shareholders, to fund strategic growth opportunities, and to make further returns of capital to shareholders as appropriate, whilst maintaining a strong balance sheet.

It added: “Consistent with this policy and given the highly cash generative nature of the business, the group today announces that it intends to commence a £10m share buyback programme, subject to market conditions.”