Severfield Cancels £10M Buyback Amid Market Struggles—Here’s Why
Severfield PLC, the UK’s leading structural steel specialist, has warned that its annual profits will be lower than expected due to project delays, increased competition, and economic uncertainty. The company now forecasts underlying pre-tax profit between £18 million and £20 million for the fiscal year ending March 29, 2025—a notable drop from previous estimates.
Tough Market Conditions Impact Outlook
Since late 2024, rising costs and tighter pricing in the UK and European markets have made it difficult for Severfield to maintain its profit margins. The company has also faced significant project cancellations and delays, including a major project that was supposed to start production in January 2025 but has now been pushed back to early 2026.
Despite these setbacks, Severfield’s order book remains strong. As of February 1, 2025, the company had £403 million worth of projects in the pipeline, with £281 million set for delivery over the next 12 months. However, this represents a slight decline from £410 million reported in November 2024, highlighting the slowdown in new project acquisitions.
Cost-Cutting Measures and Share Buyback Cancellation
In response to financial pressure, Severfield has taken steps to cut costs and improve efficiency. However, these efforts have not been enough to offset under-recovered factory overheads and a revised contract judgment related to a long-term nuclear project.
As part of its financial restructuring, Severfield has canceled its £10 million share buyback program, which began in April 2024. Before halting the program, the company had repurchased 13.4 million shares for £9.3 million.
Debt Levels and Financial Stability
As of January 31, 2025, Severfield’s net debt stood at £55 million, consisting of £40 million in revolving credit facilities and £15 million in acquisition-related loans. By the end of the fiscal year, the company expects net debt to be between £45 million and £50 million, leaving it with £25 million to £30 million in cash headroom.
What’s Next for Severfield?
Although the short-term outlook is challenging, Severfield remains optimistic about future growth. The company is securing new data center, industrial manufacturing, and commercial office projects, including large-scale developments in London.
Severfield’s leadership acknowledges that fiscal year 2026 profits may also be lower than anticipated, as client decision-making slows and market confidence weakens. However, the company believes that upcoming opportunities—particularly in green energy infrastructure and large-scale urban development—will support its long-term growth strategy.
With a strong order book and continued investment in strategic projects, Severfield aims to regain profitability and deliver solid returns for shareholders in the coming years.
