The UK’s steel contracting industry is navigating a challenging landscape impacted by inflation and COVID-19.
- Severfield leads in profit despite revenue declines, showing significant growth in its European orders.
- William Hare reports a notable loss, contrasting previous profits, amid an economic downturn.
- Half of the top specialists managed to improve margins, even as the average median margin slightly decreased.
- Severfield’s CEO remains optimistic about the sector’s role in economic development despite ongoing pressures.
The UK’s steel contracting industry faces significant challenges. With inflation and COVID-19 pandemic impacts, profit margins have tightened across the sector. Four of the top ten firms, including William Hare, experienced a decline in pre-tax profits. Notably, William Hare reported a substantial loss of £3.6m compared to a previous profit of £1.4m.
Severfield, the industry’s largest firm by revenue, reported the highest pre-tax profit of £21m, which constitutes over a third of the total £60.7m pre-tax profit across the top ten firms. Although experiencing a revenue decline, the company exhibits notable signs of recovery with its European order book surging from £301m in 2021 to £486m in 2022, overcoming a dip witnessed in 2020.
Despite only a modest 2 per cent revenue increase, the Bourne Group, facing intense market competition, dropped to ninth place from fifth, reflecting the struggle to cope with rising costs and supply chain pressures.
Remarkably, the steel specialists maintained the second-highest margins among the various categories, trailing just behind the scaffolding sector. While half of the top firms succeeded in improving their pre-tax margins, the overall median margin slightly fell from 4.65% to 4.5%.
Caunton emerged as a significant performer with a 90% increase in turnover, elevating its ranking from ninth to fourth place. Its pre-tax profit tripled, showcasing an optimistic outlook bolstered by strategic price negotiations mitigating raw-material market uncertainties, which the firm identifies as its primary risk.
Severfield CEO Alan Dunsmore attributes some stability to the sustained demand for environmental, technological, and publicly funded infrastructure projects. Despite challenges of inflation and supply chain strain, Dunsmore is confident about the sector’s future, emphasising its central role in UK’s economic development.
Steve Corcoran of Taziker highlights their resilience in the rail sector, predicting continued pressures due to inflation and fuel costs, and mentions an impactful pound depreciation affecting purchasing power.
The UK’s steel contractors persist amidst significant economic challenges, demonstrating resilience and strategic adaptation.
