Structural steel supplier Severfield (LON: SFR) improved interim profit and still has a strong order book covering a variety of sectors. The outlook remains positive with good visibility for the second half and beyond.
In the six months to September 2022, revenues improved from £195.9m to £234.9m through a combination of underlying growth and higher steel prices. Underlying pre-tax profit rose from £10.3m to £12.1m, including a doubled contribution of £600,000 from the India business.
Net debt was £15.8m at the end of September and the interim dividend was raised from 1.2p a share to 1.3p a share.
In the UK, strong markets include nuclear, transport, distribution and data centres. The latest statement from the Chancellor of the Exchequer appears to confirm that major infrastructure spending will continue.
The facility in India is nearing its capacity of 100,000 tonnes and a second site is being identified. Demand for structural steel is expected to be significant for many years.
The UK and Europe order book is worth £464m and the India order book is £143m. Those figures are slightly lower than in June, but this still means that 95% of forecast revenues for 2022-23 are covered and 50% for 2023-24. Tendering activity continues at high levels.
Singer maintains its full year pre-tax profit forecast at £31.3m, up from £27.1m, although it has raised its forecast revenues due to higher steel prices and other cost increases. At 58.6p, the shares are trading on seven times prospective earning and the forecast yield is 5.6%.
