Constructional steelwork giant Severfield issued profit warning this morning blaming project delays and falling business confidence.

In a trading statement, Severfield said it would look for a further round of cost reductions and had cancelled the £10m share buyback programme to manage the fall off in workload.

The profit warning blaming an unnamed major project delay, thought to be the £4bn Agratas gigafactory in Somerset, follows a reported £6m half-year loss last November when the contractor revealed a £20m hit from welding defects on several HS2 and National Highways bridge structures.

These welding problems involved five highways bridges and nine structures on HS2. This morning Severfield sought to reassure shareholders reporting that costs for remediation remained broadly inline with expectations.

The trading statement said: “The bridge remedial works programme is progressing as expected and our view of testing and remedial costs and insurance recoveries is broadly unchanged, with more clarity expected in the coming weeks as discussions with affected clients, relevant industry authorities, insurers and other stakeholders progress.”

“In our interim results announcement on 26 November 2024, we highlighted that the market backdrop in the UK and Europe was challenging.

“Since then, market conditions have shown no signs of improvement, with pricing remaining at tighter levels for longer than expected in a competitive market and project opportunities continuing to be either cancelled or delayed.

“This includes a large project for which production was expected to commence in January and which has been recently delayed until early FY26.”

Severfield said it had sought to mitigate the absence of large ‘anchor’ projects through new project awards, cost reductions, as well as the cancellation of the share buyback programme, but it had not been possible to secure sufficient work in the short term to fully offset the non-recovery of factory overheads in the final quart of the year.

The steelwork contractor also revised a contract judgement to reflect changes on a long-term nuclear project originally tendered in 2019.

Severfield said it was seeking to mitigate the ongoing impact of these market conditions through ongoing cost reduction actions.

Looking further ahead, Severfield said it had secured some attractive large projects for FY27, and also saw future large opportunities for data centres, industrial and commercial offices, including the emergence of several planned large developments in London.