March 22 (Bloomberg) -- Severfield-Rowen Plc, a U.K. supplier of structural steelwork, said profit plunged last year as government spending cuts and rising steel prices hurt demand.
Net income fell 76 percent, to 7.6 million pounds ($12.5 million), or 8.6 pence a share, from 31.3 million pounds, or 35.2 pence a share, in 2009, the company said in a statement. Sales fell 23 percent to 266.7 million pounds.
Chief Executive Officer Tom Haughey said in a telephone interview that he expects underlying pretax profit to be 8 million pounds to 11.5 million pounds this year, in line with market forecasts, and salaries will be frozen. He foresees U.K. orders of 270 million pounds to 290 million pounds by the end of the year, up from 226 million at present.
“Subject to not falling off the rails, we will meet market forecasts,” Haughey said. “We see better times from 2012, when there are opportunities like in the London commercial office market.”
The company, which is based in Thirsk, northern England, said its Indian joint venture, JSW Severfield Structures Ltd., has seen its order book increase to 33 million pounds and the company plans to expand in the country.
Haughey said the Indian market is strong, the sector is busy and demand is good compared with the U.K.
Opportunities with the Indian joint venture are “very exciting in our view,” said Andrew Douglas, an analyst with Royal Bank of Scotland, in an e-mailed note to investors today. “Management’s comments in respect of the outlook are largely as expected,” with “an underlying demand recovery expected in 2012.” Douglas recommends holding the stock.
The stock climbed 19 pence, or 8.2 percent, to 251 pence at the 4:30 p.m. close in London trading today, giving the company a market value of 223.5 million pounds.
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