Severfield has posted a record order book in the UK and Europe for the second half of the year, totalling £479m – a 22 per cent increase on six months ago.
The Yorkshire-based steel specialists are revelling in booming business, with demand rebounding from the pandemic.
Its order book contains £382m worth of projects that will ready for delivery over the next 12 months, with a mix of projects across the group’s key sectors.
The company believes it is well-positioned to take advantage of significant opportunities across the distribution and industrial sectors..
It is also targeting transport infrastructure, such as work on HS2, as well as nuclear, stadia and leisure.
In terms of geographical spread, 94 per cent of the orders represent UK projects, with remaining six per cent set for delivery in Europe and the Republic of Ireland.
Severfield’s net working capital has increased over the past six month, reflecting higher steel and energy prices.
It has also increased steel purchases to meet production requirements in early 2023, when executing its order book.
Despite the uptick in business, Severfield reported year-end net debt of £19m, representing an overdraft of £4m and outstanding acquisition loans of £15m.
Meanwhile, its Indian joint venture (JSSL) has performed profitably and in line with expectations in the second half of the year.
This follows a difficult start to the year when output was disrupted by the second wave of COVID-19 and inflationary pressures.
JSSL has continued to win new work, resulting in a record order book of £166m as of April 2022 – a hefty upgrade on its £140m total in November.
Harry Phillips, analyst at Peel Hunt, has maintained its ‘buy’ position with a target price of 100p.
He described the figures as an “encouraging pre-close update” and considered the stock a “good opportunity.”
Commenting on the company’s performance, he said: “Tendering activity is described as encouraging in both the UK and Europe, increased steel prices continue to be passed through and activity in the order book is broad based across industrial, distribution, stadia and so on.”