Last close As at 05/08/2026
GBP0.37
▲ −0.30 (−0.80%)
Market capitalisation
GBP111m
Research: Industrials
Severfield’s FY24 results demonstrate robust profit growth despite declining revenue, and management highlighted the positive outlook in its key markets of the UK, Continental Europe and India. The total order book has also remained at elevated levels despite the loss of the £50m Sunset Studios order, highlighting the underlying future earnings visibility. The FY25e P/E rating of 8.1x is comfortably below the long-term average of c 10x, implying material risk is discounted in the rating. The stock yields over 5% despite a recent bounce in the share price, an added attraction.
Severfield |
Performing well with improving outlook |
FY24 preliminary results |
Construction and materials |
21 June 2024 |
Share price performance
Business description
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Analyst
Severfield is a research client of Edison Investment Research Limited |
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Severfield’s FY24 results demonstrate robust profit growth despite declining revenue, and management highlighted the positive outlook in its key markets of the UK, Continental Europe and India. The total order book has also remained at elevated levels despite the loss of the £50m Sunset Studios order, highlighting the underlying future earnings visibility. The FY25e P/E rating of 8.1x is comfortably below the long-term average of c 10x, implying material risk is discounted in the rating. The stock yields over 5% despite a recent bounce in the share price, an added attraction.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/23 |
491.8 |
32.5 |
8.4 |
3.4 |
9.0 |
4.5 |
03/24 |
463.5 |
36.5 |
8.9 |
3.7 |
8.5 |
4.9 |
03/25e |
528.4 |
36.0 |
9.4 |
3.8 |
8.1 |
5.0 |
03/26e |
539.0 |
39.8 |
10.6 |
4.2 |
7.2 |
5.5 |
Note: *PBT and EPS are on an underlying, diluted, company basis, excluding amortisation of acquired intangibles and exceptional items.
Operational deliverance overcomes weaker markets
Severfield reported underlying operating profit that was up 14% to £37.7m despite a 6% decline in revenue to £463.5m as operational delivery overcame the impact of weaker market conditions. The implied underlying operating margin increased 140bp to 8.1%, which is the highest margin since 2020. Underlying PBT increased 13% to £36.5m, with underlying EPS rising 5% to 8.9p, from which the company anticipates paying a total dividend for the year of 3.7p, up 9%. Net debt came in at £9.4m on a pre IFRS 16 basis, benefiting from a £10m customer advance and a £10m working capital improvement, as previously advised.
UK orderbook robust, India returns to growth
Over the last six years, Severfield’s UK and Europe order book has grown materially, from £230m in 2018 to £478m at 1 June, more recently benefiting from the buoyant European market and the inclusion of the VSCH backlog. It has also considerably diversified over that period, reducing risk. Furthermore, the Indian orderbook also grew, from £165m in November to £181m at 1 June as the market remains robust. The outlook for both regions remains positive and we expect the order book to remain at elevated levels for the foreseeable future.
Valuation: Material implied upside
The orderbooks look robust and the market outlook in the UK and Europe and in India appear encouraging, given the plans for infrastructure investment by numerous governments. The £10m share buyback highlights the balance sheet strength and management confidence as well as underpinning future EPS growth. That said, we have reduced our top of the range FY25 PBT estimate from £37.5m to £36.0m, which is now in line with consensus. Our FY26 profit estimate is largely unchanged. Severfield is trading on an FY25 P/E of 8.1x, which compares favourably with the long-term average of c 10x, and the stock yields in excess of 5% an added attraction.
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