Severfield Shares Plunge as Market Conditions Show ‘No Signs of Improvement’

Severfield plc (LON: SFR) plunged more than 42% Monday after the structural steel group warned of worsening market conditions, project delays, and a profit downgrade.

The company said market conditions in the UK and Europe had not improved. Pricing pressures are said to have persisted, and key project opportunities are being cancelled or postponed. 

A major project originally set to begin in January has been delayed until early FY26, impacting short-term revenue. As a result, Severfield now expects FY25 underlying profit before tax to be between £18 million and £20 million, below previous estimates.

The company's order book stood at £403 million as of 1 February 2025. This is slightly down from £410 million in November 2024. 

Despite efforts to mitigate market challenges through new project wins, cost reductions, and operational efficiencies, the company admitted it had been unable to offset factory overhead costs in Q4.

Looking ahead, Severfield cautioned that client decision-making remains slow, and business confidence in the UK remains weak. With no major ‘anchor’ projects secured for FY26 and continued market uncertainty, profitability for FY26 is now expected to fall below FY25 estimates.

“The Group is seeking to mitigate the ongoing impact of these market conditions through ongoing cost reduction actions,” said the firm. “As such, underlying profit before tax for FY26 is now expected to be below our revised expectations for FY25.”

In response, Severfield has cancelled its £10 million share buyback programme. £9.26 million worth of shares were repurchased before the termination.

Despite the downturn, Severfield remains optimistic about long-term opportunities in sectors such as data centres, manufacturing, and green energy infrastructure.

“Looking further ahead, we have already secured some attractive large projects for FY27, and we are also seeing future large opportunities in sectors such as data centres, manufacturing (industrial) and commercial offices, including the emergence of several planned large developments in London,” they added.