Severfield reports nearly £18 million financial loss

The steelwork firm faces significant financial challenges amid ongoing bridge-related costs.

Severfield reports £18m loss due to bridge issues

Severfield has reported a substantial pre-tax loss of nearly £18 million as it grapples with serious welding faults on several bridge projects. The company incurred £35.6 million in non-underlying costs for the year ending in March, including £23.4 million for repairs related to the faulty bridges. Overall remediation costs for approximately a dozen structures reached £43.4 million, partially offset by a £20 million insurance claim. However, unforeseen bridge issues led to an additional £9 million in costs due to client payment delays and uncertainty about revenue recoverability. Despite a dip in revenue by 3% to £451 million and a halved underlying pre-tax profit of £18 million, Severfield has secured new bridge contracts and maintained a £444 million forward order book, with significant work expected in the coming year.

Severfield's financial troubles highlight the precarious nature of the construction industry, especially when dealing with complex infrastructure projects. The welding faults not only dent profits but also raise serious questions about quality control and oversight in engineering practices. With market conditions tightening, the company’s decision to take drastic measures, like workforce reductions and potential equity sales, illustrates a defensive strategy in uncertain times. The firm's ability to secure new projects amid such challenges suggests resilience, yet the ongoing costs could linger, affecting long-term recovery and growth.

Highlights

The road ahead for Severfield will require careful navigation of remaining costs and market conditions.