Severfield: Middle East conflict could affect company warning

The comments came as a trading update also revealed the firm expects full year profits for the year to March 28 to be in line with current market expectations of £10.2million.

Nonetheless, the Thirsk headquartered company, which also has operations at Malton, reported a UK and European order book of £438million and a “record Indian order book of £331million.”

Severfield said it had a “secure order book” which “remains well diversified, with a good mix of projects across the Group’s key market sectors” and “momentum across India continues to strengthen.”

Expansion at the new Gujurat facility remains on track and the business “well positioned for opportunities in the Indian construction market.”

However, the conditions in the UK and Europe have “remained subdued, reflecting macroeconomic uncertainty, elevated interest rates, and geopolitical instability, weighing on business confidence and the timing of project awards.”

The trading update further warned: “We also remain mindful of the ongoing conflict in the Middle East, which continues to disrupt global trade routes and supply chains, and drive energy price volatility.

“The current direct cost exposure of the Group is limited, reflecting our well-established policies of securing steel prices at contract stage and hedging key commodity costs.

“However, whilst these measures provide a degree of short-term protection, the situation remains uncertain and largely outside the Group’s control.

“Prolonged disruption or further escalation could give rise to broader impacts on project timelines, supply chain reliability and overall market conditions. We will continue to monitor developments closely and take further mitigating actions as appropriate.”

The update concluded the board is cautious concerning the year ahead with an expected underlying pre-tax profit in the coming year of £12-15million.

The company said this reflected “increased geopolitical uncertainty, together with broader macroeconomic conditions, the impact of later project start dates, and a continued tight pricing environment.”

The full year results are expected to be published on June 23.