Severfield Share Discussion Threads

[edmundshaw] 29/11/2012 09:49

Still watching. Quality co at the right time at the right price...

[zeuseq] 29/11/2012 09:34

sp proving itself to be a disaaaaaaster!

[zeuseq] 27/11/2012 11:38

Only worth tnav imho,..66p, profit warning soon probably but we will have to wait and see.

[ariane] 16/11/2012 08:15

SNB Jordan: Franc Still Highly Valued, Burdens Economy
PrintAlert
The Swiss franc is still highly valued and a burden for the Swiss economy, central bank chairman Thomas Jordan said Friday.
"The reasons that led us to the implementation of a minimum exchange rate are still in place," Mr. Jordan told bankers attending an industry conference in Zurich.
The SNB introduced a minimum exchange rate of 1.20 Swiss francs per euro on Sept. 6, 2011, after the Swiss currency had risen to unprecedented highs against the dollar and the euro in August.
The central bank has since frequently been selling francs against foreign currency to enforce the minimum exchange rate to ward off inflation and help exporters.
"The fiscal problems of many countries remain a source of potential safe-haven inflows, while the franc is still highly valued at the current rate and a burden for the economy," Mr. Jordan said.
That's why the SNB at its most recent policy meeting in September, that it plans to defend the minimum exchange rate with utmost determination, Mr. Jordan added.
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[itchycrack] 14/11/2012 10:42

I expect SFR are involved in some of these projects:

[edmundshaw] 08/11/2012 14:31

Have a look at BBY statement today - I am not convinced about a 2013 recovery. Still, 2014, 2015 - how good will it get and what discount rate to apply??

[fangorn2] 08/11/2012 12:05

Bowed but not broken

[eswr] 07/11/2012 08:37

SFR - helpful posting. Market forecasts were way too high. They have operational gearing in the business and need to maintain revenues and activity levels to keep all their operations going. 50 heads of reduction is not much in a total headcount of around 1000+ staff.

[edmundshaw] 06/11/2012 23:03

Itchy, can you give some evidence for the growing pent up demand for new construction projects? I see new projects around, but not much in the way of Shards, Heathrow temini, new shopping malls and big stadia.

Perhaps a few warehouses for internet retailers and the like...

[gopher] 06/11/2012 21:59

Agree with you rivaldo.

There are some attaractions but its difficult to beleive in a construction led boom anytime soon in the UK and there is still hope priced into the valuation as ItchCrack has just demonstrated

[itchycrack] 06/11/2012 13:16

If any big government-led construction projects do get the go-ahead, as (IMHO) is quite likely when we triple-dip next year, SFR are likely to be one of the main beneficiaries. I'm also hopeful that the Indian JV can at least offset some of the doom and gloom in the UK and at least stop the share price from falling too far.
But much will depend on any large construction projects getting the go-ahead next year and the general macro economic backdrop. I do think however there is a growing pent up demand with new construction projects so when the economy does eventally turn I think SFR could get very busy very quickly.
All IMHO of course, DYOR etc.

[grigor] 06/11/2012 13:10

The next 2 to 3 years seem grim - Will it survive?

This share is an old friend which I still keep an eye on.

Considering this as a recovery play.

[rivaldo] 06/11/2012 12:27

SFR has been on my watchlist for years as a market leader, but I've never bought because it's always been so expensive on fundamentals. On every disappointment I expect it to fall markedly to a more realistic level, but it never falls enough - until the next disappointment, when it falls to the level it should have been at in the first place!

Once again the share price is surely far too high for where it should be, with a £90m-£100m m/cap aginst a £1m forecast PBT, and with £28m of borrowings?

The Times today gives more ammo - perhaps City support, which has held the share price up in the past, is ebbing away:



"The steel fabricator behind the Olympic Stadium and the Shard tower has issued its second profits warning in five months after falling victim to a renewed construction slowdown.

Shares in Severfield-Rowen crashed by a quarter after it warned that pre-tax profits this year would be only £1 million, compared with the £9 million forecast by the City.

Britain's biggest steel fabricator has been forced to slash its margins by cash-strapped developers. It also blamed delays and postponements in construction projects.

However, analysts attacked management for running the company inefficiently. Cost overruns at two complex projects resulted in a profits warning in June. Two months later Tom Haughey, the chief executive, said that the group would fold its three worst-performing UK divisions into one business. Severfield-Rowen said yesterday that the move would result in 50 job losses but promised that it would boost flagging profit margins next year.

Kevin Cammack, from the broker Cenkos, said: "The structure was clearly wrong. There is undoubtedly an element of [the profit warning] being down to their inefficiencies."

The construction industry in Britain ground to a halt with the financial crisis in 2008, but margins started to recover a couple of years ago as work picked up. But since the summer margins have tightened again as companmies compete for a dwindling share of work, particularly in offices, warehouses and shops.

Severfield-Rowen said that it did not expect the market to recover. Mr Cammack added: "It's a second dose of what we have already been through once. There is not enough work around and there is still a lot of capacity to do it." The company said that performance would recover next year and that its new joint venture in India was generating "very strong demand". Its shares closed down 24.4 per cent at 106¾p."

[eswr] 06/11/2012 11:44

The fact is that institutions who might want to get out can't. The price is still high given the collapse in current profitability. It is well positioned for recovery as market leader but that is not perhaps for a couple of years (2015+). In the meantime this would be "dead money" and exposed to more risk of soft demand and pricing pressures. Current profit warning is severe - EBIT down from market consensus of around £8 to 9m to £1m and late in the year vs. Dec year end.

If the EBIT margin was say 5% and revenues are say £300 million then that would be £15m EBIT; multiple of say 7 x = say £105m EV less debt of say £40m (including pension liability of £9m) = £65m for the equity = circa 70 pence per share (90 million shares in issue). They are hoping to get operating profit margins back to 5 to 6% "over time". £300m is on the high side for revenues and above the current market consensus even for 2013 and 2014 (before being adjusted for the current profit warning). India is interesting but small relative to the revenues/profits of the rest of the business. They have tried to maintain the dividend at 5 pence (cost circa £4.5m) but I think that they may have to reduce it now that it is materially uncovered. Note the comment about "cash conservation" and how working capital has increased materially - absorbing £26m in 2011 and £25m in 2010 as they gave lengthened payment terms to customers and had to pay creditors more quickly)

[itchycrack] 06/11/2012 10:02

Well on a positive note, when the macro economic backdrop does improve then SFR should be one of the main beneficiaries.

[owenski] 06/11/2012 09:50

Its a shame, SFR is a market leader, have done well here in the past but however good a company is, if its market is declining then so does the company. I'm a bit surprised that the share price was at c140 prior to the TU, this is still expensive imo

[edmundshaw] 05/11/2012 16:32

Cheers phar lap. Interesting.

Every time things get worse here, the price drops but not enough for me. I guess I should be grateful as it has kept me from temptation! :-)

[phar lap] 05/11/2012 15:20

What our commercial dept are forecasting (Tata Steel).
Demand for sections very gloomy

[sleveen] 05/11/2012 15:14

profits warnings tend to come in 3s.

[edmundshaw] 05/11/2012 15:14

phar lap, whose forecasts are those? SFR seems more sanguine!! :-)

[phar lap] 05/11/2012 15:12

UK domestic steel market forecast to remain in the doldrums until 2015.
It will be 2020 before market back to pre-crisis levels.

[itchycrack] 05/11/2012 14:59

Got a shed load more at 96p :-)
Whilst disappointing, its not surprising in my view given the economic backdrop.
However, long term this has to be a great entry point (IMHO).
It also looks like the indian JV was a srewd move by management!

[pugugly] 05/11/2012 14:55

£9m to £1 million - Surprised share price is holding up as well as it is. Borrowing down to £28.3m down from some £31.2M refs but still significant at the new market cap -

?? Could this be heading for the NTAV figure of some 66p (source Refs October) ??

Has been a disaster zone since Jan 2010 ..

While no mention made of Dividend I would suspect that it should be cancelled as would be some 75%-80% uncovered.

(imo dyor e&oe)

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