Another profits warning from Severfield as project delays continue

Severfield says that its pipeline of work looks fine but client decision-making keeps being deferred.

In a trading update today, Severfield said: “Market conditions have shown no signs of improvement, with pricing remaining at tighter levels for longer than expected in a competitive market and project opportunities continuing to be either cancelled or delayed.”

Profits will therefore be lower than expected in both the current financial year and the one staring next month.

Subsequently Severfield has cancelled plans for a £10m share buyback and is cutting costs.

In its statement today it said: “Whilst we continue to see a good pipeline of project opportunities, client decision-making continues to be deferred and projects are not being awarded or progressing within normal timescales, consistent with the current lower level of business confidence in the UK economy as a whole. This, in tandem with the absence of large ‘anchor’ projects in the order book and a general market backdrop which is not expected to improve in the short-term, is having a consequential impact on FY26… Underlying profit before tax for FY26 is now expected to be below our revised expectations for FY25.”

Severfield warned in November that its profits for the year to 31^st March 2025 would be below its previous expectations. It has now doubled down on this after a sticky fourth quarter.

“Whilst the group has sought to mitigate the effects of these prevailing market conditions through new project awards, our normal contract execution improvements and cost reductions, as well as the cancellation of the share buyback programme, it has not been possible to secure sufficient work in the short term to fully offset the non-recovery of factory overheads in Q4. This, together with a revised contract judgement to reflect changes on a long-term nuclear project originally tendered in 2019, means that the group now expects underlying profit before tax for the full year to be in the range of £18m-£20m.”

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