Structural steel giant Severfield crashed to a £40m pre-tax loss last year as new chief executive Paul McNerney took a £50m hit to simplify the business, exit modular construction and draw a line under legacy issues.
Britain’s biggest steelwork contractor booked £50m of exceptional charges during the year to 28 March 2026, including £22m of impairment charges and £13m linked to closing its Modular Solutions arm.
The long-running bridge defects saga also continued to weigh on results, with remedial costs increasing by a net £8.2m during the year despite Severfield securing a further £7.5m of insurance recoveries.
The hefty exceptional charges masked an underlying business that remained profitable but came under intense pressure from a fiercely competitive market.
Underlying pre-tax profit fell 42% to £10.5m as operating margins also came under sustained pressure, slumping to 2.8% from 4.8% previously.
Severfield said the UK and European structural steel market remained subdued throughout the year, with competitive pricing, delayed project starts and a shortage of larger projects squeezing returns.
McNerney said: “FY26 was a challenging year for Severfield, with profitability impacted by competitive pricing, delays to project awards, and lower activity in parts of our core markets.”
He added: “We have taken decisive action to simplify the portfolio, strengthen operational discipline and focus the business on sectors and geographies where our engineering capability gives us a clear competitive advantage.”
Despite the profit slump, Severfield substantially strengthened its balance sheet.
Net debt reduced by £15m to £28m, helped by strong cash management.
The contractor enters the new financial year with an order book of £507m, up from £429m six months earlier, with £339m scheduled for delivery over the next 12 months.
McNerney warned FY27 would remain a transition year as lower-margin contracts secured during the downturn continue to work through the system.
Following his sweeping business review, NcNerney said that Severfield would now pivoting away from a fabrication-led model towards a more flexible, capital-light business focused on complex projects where barriers to entry are higher and margins are stronger.
Key target sectors include commercial offices, industrial and defence projects, transport infrastructure, nuclear, stadia, data centres and energy schemes.
The group also sees growing opportunities from its Indian joint venture, JSW Severfield Structures, which has a record order book of £344m and is expected to become an increasingly important contributor to profits.
Operational transformation programmes are already delivering results, with more than £3m of annualised cost savings achieved to date.
Looking beyond the transition period, Severfield has set ambitious medium-term targets of £500m-£550m revenue, operating margins of 7%-8% and underlying pre-tax profit of £40m-£50m, including £10m from its Indian business.
Structural steel giant Severfield crashed to a £40m pre-tax loss last year as new chief executive Paul McNerney took a £50m hit to simplify the business, exit modular construction and draw a line under legacy issues.
Britain’s biggest steelwork contractor booked £50m of exceptional charges during the year to 28 March 2026, including £22m of impairment charges and £13m linked to closing its Modular Solutions arm.
The long-running bridge defects saga also continued to weigh on results, with remedial costs increasing by a net £8.2m during the year despite Severfield securing a further £7.5m of insurance recoveries.
The hefty exceptional charges masked an underlying business that remained profitable but came under intense pressure from a fiercely competitive market.
Underlying pre-tax profit fell 42% to £10.5m as operating margins also came under sustained pressure, slumping to 2.8% from 4.8% previously.
Severfield said the UK and European structural steel market remained subdued throughout the year, with competitive pricing, delayed project starts and a shortage of larger projects squeezing returns.
McNerney said: “FY26 was a challenging year for Severfield, with profitability impacted by competitive pricing, delays to project awards, and lower activity in parts of our core markets.”
He added: “We have taken decisive action to simplify the portfolio, strengthen operational discipline and focus the business on sectors and geographies where our engineering capability gives us a clear competitive advantage.”
Despite the profit slump, Severfield substantially strengthened its balance sheet.
Net debt reduced by £15m to £28m, helped by strong cash management.
The contractor enters the new financial year with an order book of £507m, up from £429m six months earlier, with £339m scheduled for delivery over the next 12 months.
McNerney warned FY27 would remain a transition year as lower-margin contracts secured during the downturn continue to work through the system.
Following his sweeping business review, NcNerney said that Severfield would now pivoting away from a fabrication-led model towards a more flexible, capital-light business focused on complex projects where barriers to entry are higher and margins are stronger.
Key target sectors include commercial offices, industrial and defence projects, transport infrastructure, nuclear, stadia, data centres and energy schemes.
The group also sees growing opportunities from its Indian joint venture, JSW Severfield Structures, which has a record order book of £344m and is expected to become an increasingly important contributor to profits.
Operational transformation programmes are already delivering results, with more than £3m of annualised cost savings achieved to date.
Looking beyond the transition period, Severfield has set ambitious medium-term targets of £500m-£550m revenue, operating margins of 7%-8% and underlying pre-tax profit of £40m-£50m, including £10m from its Indian business.
