Severfield Beats Forecasts with Strong H1 2026, Confident on Full-Year Despite Market Hurdles

Severfield plc (LON:SFR) unveiled its half-year 2026 financials, revealing slightly stronger profits than analysts had anticipated despite a tough backdrop for structural steel businesses. Revenue slid 18% year-on-year to £206 million, a dip well flagged by the company, with an EBITA tallying £2.3 million on the back of reduced volume and stiff pricing pressures.

The firm managed a pre-tax profit of £0.6 million and earnings per share clocked in at 0.2p, surpassing its own guidance that had trailed a break-even performance during the first half. Net debt by September's end stood at £21.7 million, a figure that speaks to ongoing balance sheet vigilance.

Severfield's UK and European book of orders was up 5% to £429 million compared to last year, although it slipped 3% from the previous quarter's £444 million, signaling some volatility in new contract flows. The group bagged £190 million in new jobs during the six months, of which 22% targeted the continent and Ireland.

Notably, Severfield's Indian joint venture posted an impressive 55% surge in output, delivering 48,000 tonnes and lifting sales 34% to £65.8 million compared to the prior year. This JV also improved its EBITA margin by 200 basis points to 7.1%, contributing £1 million to the parent company's results - a bright spot amid wider sector challenges.

The JV's order book hit a record £286 million, marking a 45% annual increase and a 19% bounce since mid-year, with commercial projects making up the lion's share at 80%. This momentum in India contrasts with the more subdued European market, where tight margins remain an issue.

Management stuck to its full-year profit forecast for 2026, pointing out that 95% of the second half's revenue is effectively locked in via its current order book. Despite subdued market conditions, there was an uptick in tendering activity, lending some optimism for 2027.

Looking ahead, CEO McNerney is preparing to unveil strategic initiatives early next year that could reshape Severfield's market approach. Adding to this, a new Strategy & Transformational Director has joined from Costain, signaling a push towards operational change.

All in all, Severfield's results sketch a picture of a company navigating headwinds with a steady hand, boosted significantly by its growth in India. Whether the UK and Europe segments will sustain their recovery next year remains to be seen as pricing pressures persist.