It was discovered last year that several recent Severfield structures were not in compliance with clients' weld specification requirements.
The issue predominantly related to 12 bridge projects that are either ongoing or were completed over the past four years. 聽Nine of the bridges were for the HS2 project; the other for National Highways
In the company accounts for the financial year (FY) to 29th March 2025, published today, chairman Charlie Cornish reveals: 鈥淭he issues all arise out of a particular bridge specification and related sub-optimal choices of welding procedures, exacerbated by limitations in the specified weld testing regime for these projects. The programme of testing and remedial work to resolve the issue is progressing as expected.鈥�
The financial hit is a net non-underlying charge of 拢23.4m in the FY 2025 accounts, representing estimated testing and remedial costs of 拢43.4m for all the affected bridge projects, offset by insurance recoveries of 拢20.0m which have been agreed with professional indemnity insurers.
Severfield has also incurred testing and remedial cash costs of 拢19.0m and the remaining cash costs are expected to be incurred over this year and next.
The bottom line result was a pre-tax loss of 拢17.5m (2024: 拢23.0m profit) on revenue that was down 3% at 拢450.9m (2024: 拢463.5m).
It was not just the welding that hampered Severfield鈥檚 progress last year. Tighter prices continue to impact profitability and clients鈥� projects are subject to delays.
鈥淎nticipated recovery in some sectors has been slower than expected albeit tendering activity has improved recently,鈥� Cornish said.
On the plus side, the UK and Europe order book has swollen to 拢444m (as of 1st July 2025) up from 拢410m eight months ago), of which 拢324m is for delivery over the next 12 months. These include new industrial, data centre, infrastructure, energy and commercial office orders.
And despite its recent bridge problems, Severfield continues to win new business in this sector. 鈥淲e have recently secured several new bridge projects and we are continuing our work on ongoing road and rail bridges for a variety of clients in accordance with the required specification,鈥� Cornish said.
Severfield has been without a chief executive since it let Alan Dunsmore go earlier this year. As non-executive chairman, Charlie Cornish, a former chief executive of Manchester Airports Group, has taken the helm temporarily until a new chief is appointed.
Summing up the year, he said:聽 "After many years of strong profit growth, FY25 was a difficult year for the group. Whilst we performed well operationally, delivering a diverse range of projects for clients across many of our key market sectors, tough market conditions in the UK and Europe, combined with the ongoing bridge remedial works programme, contributed to weaker financial results. In response to these challenges, we have taken and continue to take appropriate cost reduction and cash conservation measures. Despite the current market backdrop, we have secured a strong baseload of work for FY26 and into FY27, and we continue to see some good projects coming to market. Supported by our stronger financial position and proven track record of delivery, we are well placed to benefit from the anticipated market recovery."
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