Severfield breaks back into black despite India loss

3rd Jun 2014 15:08

Structural steel group Severfield broke back into the black last year and said its Indian operations need further work but offered an opportunity for growth. The FTSE SmallCap-listed outfit turned a previous £21.5m loss in the preceding 15 months into an underlying pre-tax profit of £4.0m in the year to end-March.Revenues of £231.3m compare with £318.3m in the comparative 15-month period. Its post tax loss was cut to £2.6m and the dividend was withdrawn, with the board saying it "intends to introduce a progressive dividend policy" when the time is right.Chief Executive Ian Lawson said the year saw stabilisation and recovery in the UK business but disappointment in India. "During the financial year Severfield has achieved substantial operational improvements across the group and delivered a significant turnaround in underlying profit before tax," he explained. "Pleasingly, the group's ongoing stabilisation and recovery generated increasing UK operating margins supported by a strong balance sheet and solid order book." The Indian joint venture performed below expectations, however, with Severfield's share of losses increasing to £3.0m due to unexpected delays and timing variations to some of the contracts leading to the factory being underutilised and dragging on margin. Lawson said "actions are being taken" to put the business in a better position and that management believe the market in India "continues to present significant future growth opportunities". Shares in the company were down 3.3% to 54.63p by 16:00 on Tuesday. OH