Olympics steel firm Severfield warns on profit

OLYMPICS and Shard structural steel giant Severfield-Rowen yesterday saw shares plunge nearly 25 per cent after the firm posted a profit warning and said redundancies are likely.

It forecast its profit this year will be “materially lower” than last year – down from a £6.8m pre-tax profit in 2011 to around £1m this year.

The drop follows the company’s announcement it will merge three of its businesses – Severfield-RowenStructures, Watson Steel Structures and Steelcraft Erection Services – into Severfield-Watson Structures at the end of 2012.

“The reorganisation is likely to see a headcount reduction in these businesses of around 50 positions,” the firm said in a trading update.

Severfield-Rowen said its profit had been hit by pricing pressures, drawn out contractual settlements and some cost overruns.

The restructuring is expected to be completed by the start of next year, with one-off organisational costs of below £1m. The changes are expected to make savings of around £2m.