Severfield stock falls after reporting lower margins amid subdued market

Investing.com -- Severfield stock falls after the structural steel company reported a significant drop in EBITA margin for fiscal year 2025, reflecting challenging market conditions and project delays.

The company posted sales of £451 million, down 3% YoY, while EBITA came in at £21.7 million with a margin of 4.8%, dramatically lower than the 8.6% recorded in FY24. Profit before tax reached £18.1 million with earnings per share of 4.3p. The company did not declare a final dividend, resulting in a total dividend of 1.4p for the year.

Severfield’s UK and EU order book stands at £444 million, representing a 7% decrease YoY but a slight 1% increase from April 2025. The company’s Commercial and Industrial segment saw sales decline 3% to £350 million due to lower industry demand and project delays, while Nuclear and Infrastructure sales fell 2% to £86 million.

The company’s Indian joint venture experienced significant challenges, with sales dropping 21% YoY to £103 million and EBITA plummeting 57% to £4.5 million. This resulted in an EBITA margin of 4.3%, down 370 basis points YoY, attributed to project delays and unfavorable mix within sub-contracted work. However, the Indian order book reached a record £240 million, up 33% YoY.

Management described the UK and EU market backdrop as "subdued" with pricing remaining "tighter than expected." Despite slow project awards, the company noted that tendering activity has recently increased, and it remains optimistic about prospects beyond the current year, supported by strong market positions and diverse end market exposure.

The company ended the year with pre-IFRS net debt of £43.1 million, better than expected, and has financing in place for approximately 2.5 years with sufficient headroom on its leverage position.

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