Steel group forg­ing ahead

Yorkshire Post - Business - - FRONT PAGE - Mark Casci BUSI­NESS EDI­TOR @MarkCasci

Sh­effield Forge­mas­ters has re­vealed a £16.4m loss af­ter de­pre­ci­at­ing its as­set base.

The firm’s losses for 2017 widened year-onyear from a £900,000 loss in 2016.

How­ever, the new man­age­ment team at the Sh­effield com­pany said it had a strong or­der book of con­tracts worth £140m and that its fu­ture prospects were bright go­ing for­ward.

Bosses at Sh­effield Forge­mas­ters In­ter­na­tional have sounded an up­beat mes­sage about the fu­ture prospects for the busi­ness, cit­ing a strong or­der book of con­tracts worth £140m.

The firm posted a £16.4m loss for the year ended De­cem­ber 31, 2017 ow­ing largely to the de­ci­sion to de­pre­ci­ate the as­set base of the com­pany.

The re­sults com­pare with a loss of £900,000 in 2016 and are the first to be re­ported since David Bond was ap­pointed as Forge­mas­ters’ chief ex­ec­u­tive in Au­gust this year.

Mr Bond re­ferred to the loss as a “tech­ni­cal­ity” ow­ing to the ac­count­ing changes and said that a num­ber of new con­tracts, par­tic­u­larly in the de­fence sec­tor, pointed to­wards a fu­ture that would de­liver greater prof­itabil­ity for the busi­ness.

“It was a case of us clear­ing the decks a lit­tle for fu­ture in­vest­ment,” he told The York­shire Post.

“Forge­mas­ters is a very cap­i­tal in­ten­sive busi­ness. We are feel­ing in a pretty good place at the mo­ment and are sit­ting on a good or­der book. One of the sec­tors, that of de­fence, is very strong in­deed.”

Were it not for the ac­count­ing change, the com­pany would have recorded a mod­est pre-tax profit of £200,000 on rev­enues of £76.1m, a in­crease of four per cent over 2016.

Mr Bond joined the firm fol­low­ing in the foot­steps of Dr Gra­ham Honey­man who stepped down from the board in July.

He is joined by new chief fi­nan­cial of­fi­cer Steve Ham­mell, new chief op­er­a­tional of­fi­cer Paul Cahill and for­mer Rolls-Royce se­nior man­ager, Colin Smith, as chair­man.

The firm, founded in 1805, in­vested £10m into a new plant in 2017, in­clud­ing a £2m up­grade to its elec­tric arc fur­nace and a £6.5m in­vest­ment into state-of-the-art BOST ma­chin­ing cen­tres.

In 2018, it also com­mit­ted to a record in­take of 33 ap­pren­tices and now em­ploys 670 staff.

Mr Bond, in­set, added: “The new team is ex­pect­ing a re­turn to stronger lev­els of prof­itabil­ity in 2018 with the de­liv­ery of high spec­i­fi­ca­tion UK and US de­fence prod­ucts. We are also fo­cussed on ex­pand­ing our cus­tomer base for pre­mium prod­ucts and de­sign con­sul­tancy in com­plex en­gi­neer­ing ap­pli­ca­tions, to drive fu­ture mar­gins and prof­itabil­ity.

“Mak­ing pru­dent fi­nan­cial de­ci­sions does not de­tract from the ne­ces­sity of run­ning a busi­ness which needs to suc­ceed in a fiercely com­pet­i­tive global mar­ket­place.

“So our tech­ni­cal ca­pa­bil­ity and rep­u­ta­tion for in­no­va­tion is a key mar­ket dif­fer­en­tia­tor and de­mands we main­tain our skill base through our ap­pren­tice­ship pro­gramme, re­search and de­vel­op­ment ef­forts and in­vest­ment in the lat­est man­u­fac­tur­ing tech­nol­ogy, en­hanc­ing our com­pet­i­tive edge.

“Look­ing ahead, we will be in­creas­ing the amount of in­vest­ment into plant and equip­ment in 2019 as we work to main­tain the high­est de­liv­ery and qual­ity stan­dards and drive con­tin­u­ous im­prove­ment in our health & safety per­for­mance, key pri­or­i­ties for the new team.”

To sup­port these de­vel­op­ments, the com­pany also an­nounced that it has ex­tended its as­set based lend­ing fa­cil­i­ties with Wells Fargo to April 30, 2020, with the debt ceil­ing re­duced from £45m to £40m.

Mr Ham­mell added: “SFIL has seen it debt lev­els in­crease over the last three years and we are de­ter­mined to re­verse this trend to de­liver a long-term sus­tain­able busi­ness.

“The £5m re­duc­tion in the lend­ing fa­cil­ity is a step in the right di­rec­tion and we will con­tinue to re­duce our bor­row­ings over the com­ing years.”

It was a case of us clear­ing the decks a lit­tle for fu­ture in­vest­ment.

PIC­TURE: SI­MON HULME

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