Severfield – after its recent hassles this group now appears to be back on the recovery track, shares at 26.80p

Mark Watson-Mitchell - 19.06.2026

Next Tuesday, 23rd June, will see Severfield (LON:SFR) declare its 2026 Final Results, which on the face of it, will not look too good.

Expectations are that the £79m-capitalised group, which is a market-leading UK structural steel fabricator, will show a substantial drop in its pre-tax profits, from £18.1m to just £10.2m or thereabouts.

However, I understand that a profits recovery is now underway, anticipation of which has yet to show up in the group’s share price, now 26.80p.

Next week’s corporate statement should help redress that situation.

The Business

Originally founded in 1978 as Severfield-Reeve, today Severfield is the largest specialist structural steelwork group in the UK and among the biggest in Europe. 

Since its inception, the group has been involved in numerous high-profile projects, including Coal Drops Yard, Tottenham Hotspur Stadium, 22 Bishopsgate, and Western Europe's tallest skyscraper, The Shard.

It has been listed on the Main Market since 1995 and has become synonymous with innovation, high-volume capacity, and advanced engineering expertise.

The group has a long and successful history of handling steelwork projects across multiple sectors, from the highly complex to basic structural work, and ensuring on-time and on-budget completions as standard.

The group, which is based at the Dalton Airfield Industrial Estate near Thirsk in Yorkshire, is a market leader in the design, fabrication and construction of structural steel, with a total capacity of c.150,000 tonnes of steel per annum.

It has six sites, with some 1,800 employees and expertise in large, complex projects across a broad range of sectors.

Additionally, it also has an established presence in the expanding Indian market through its joint venture partnership with India's largest steel producer, the JSW Steel group.

Severfield delivers steel superstructures through its Core Construction Operations, separated operationally into a Commercial and Industrial division (bringing together its strong capabilities in the industrial and distribution, commercial offices, stadia and leisure, data centres, retail, and health and education market sectors), which includes its European operations, and a Nuclear and Infrastructure division (encompassing its market-leading positions in the nuclear, power and energy, road and rail transport, and process industries sectors).

Full Year Trading Update

On Tuesday, 31^st March, the company issued a Trading Update for its Finals to Saturday 28^th March.

It stated that the group expects its full-year underlying profit before tax for FY26 to be in line with market expectations of £10.2m, with net debt anticipated to be around £28m, significantly lower than the £48.5m consensus assumption.

The UK and Europe Order Book stood at £438m, providing good visibility, though the start dates of some projects have been delayed to late FY27.

In contrast, India boasts a record Order Book of £331m with strong momentum and expansion progressing as planned.

For FY27, the company forecasts underlying profit before tax between £12m and £15m, reflecting a cautious outlook due to macroeconomic conditions, geopolitical uncertainty, and delayed project starts.

It stated that a review of the business was nearing completion, with early changes including the discontinuation of the non-core Modular Solutions business.

Refinancing Banking Facilities

Last Friday, 12^th June, the group announced that it had successfully refinanced its banking facilities, securing a new three-year agreement with its existing lending syndicate that extends to June 2029.

This refinancing replaces the previous £60m revolving credit facility and £7.6m term loan with a renewed £60m RCF, a continued £7.6m term loan, and a new accordion option for up to an additional £30m.

The improved commercial terms, including a reduced margin and more favourable covenants, reflect the group's strengthened financial position and enhance its liquidity and flexibility to support ongoing operations, investments, and future strategic opportunities.

Management Comment

CFO Andrew Page stated that:

"We are pleased to have successfully completed this refinancing with the continued support of our banking partners.

The new facilities enhance our financial flexibility, extend our debt maturity profile and provide improved commercial terms reflecting the Group's strengthened financial position, as well as a strong platform to support the Group's future growth opportunities.

This refinancing reflects the strength of Severfield's market position, long-term customer relationships and resilient business model.

We thank our lenders for their continued support and confidence in the Group."

The Equity

There are some 296.2m shares in issue.

The larger holders include J.O. Hambro Capital Management (13.03%), M&G Investment Management (9.53%), Aberforth Partners (6.81%), Unicorn Asset Management (6.21%), Artemis Investment Management (5.60%), Chelverton Asset Management (5.46%), Legal & General Investment Management (5.20%), Invesco Asset Management (5.18%), Aberdeen Investments (4.83%),    and Threadneedle Asset Management (3.77%).

Analyst Views

Four analysts follow the group, with three calling the shares as a Buy, the other as a Hold.

The consensus average Target Price is 44p a share, the Lowest is for 40p, the Highest 48p.

Panmure Liberum is looking for 48p, while the recent Buy note from Jefferies is for 40p.

Analyst Alastair Stewart, at Progressive Equity Research, has estimates for the 2026 year with revenues at £439.6m (£450.9m), with adjusted pre-tax profits of £10.2m (£18.1m), easing earnings to 2.8p (4.3p) per share.

For the year now underway to end-March 2027, he looks for £483.6m sales, £13.0m profits and 3.6p per share in earnings.

Over at Edison Investment Research, analyst Jonathan Day has estimates for the current year for £472.4m revenues, £13.2m profits and 3.35p per share in earnings.

My View

Despite its ups and downs, I have been following this group for the last twenty years or so.

On the basis of the analyst estimates, coupled with the strength being shown by the syndicate of banks in providing such banking facilities, together with its Order Book, I continue to be attracted to the group and its prospects.

Its shares were down to 18p around this time last year, since when they have recovered to trade the 26p to 29p range.

Now at 26.80p, they are rated at around 10 times historic earnings and only a 7.5 times current-year price-to-earnings ratio.

My guess is that this group will see greater recovery in the next few years, which could make its shares at the current price, something of a ‘bargain basement offer’ and one which probably is not to be missed.

Good news after next week’s statement could well see them trade the 32p to 36p range within months.

(Profile 19.06.26 @26.80p set a Target Price of 33.50p)