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LONDON (Alliance News) - Billington Holdings PLC on Tuesday said the sale of Tata's steelworks in Scunthorpe has "significantly reduced" risk for the company and said almost all of its workload for the year is to take place in the second half after a "quiet" first quarter.
In February, Billington posted pretax profit of GBP3.1 million for the year ended December 31, 63% higher than the GBP1.9 million in 2014. Revenue rose to GBP56.7 million from GBP45.1 million, outpacing a rise in operating costs to GBP53.7 million from GBP43.2 million and boosting margins.
However, the company said it had seen "a slow start to 2016 as a result of a number of significant contracts being delayed".
The UK steel operations of Tata, the Indian conglomerate, have come into sharp focus in recent weeks following the decision by the Indian group to sell the operation, putting a significant number of jobs in the UK and the steel industry in the country itself at risk.
On Monday, investment company Greybull Capital LLP said it would buy Tata's Long Products business, which includes its plant in Scunthorpe. The business employs 4,400 people in the UK, along with another 400 in France.
The UK government, facing criticism over its handling of the problems facing Tata, said on Tuesday it would consider co-investing with a private sector partner to help save the Port Talbot steel works in Wales, which have been at the centre of battles between the government and unions representing workers at the plant.
Speaking to Alliance News on Tuesday, Finance Director Trevor Taylor said the Greybull deal is "very pleasing for us. Tata are renowned for producing a premium steel product, as compared to others around the world. Billington is an avid supporter of Tata, having historically purchased the majority of its material from the company and we will continue to do so now it is safe".
"Hopefully the purchase will provide certainty to the construction industry moving forward, and for Billington. We have in the past purchased some of our raw materials from other producers in Europe to spread the risk, but any risk we did have has now been significantly reduced," Taylor added.
Taylor added that the "slow start to 2016" continued throughout the first quarter ended March 31, with the weather at the start of the year delaying some contracts, whilst others were hit by other contractor reasons.
"This quiet start to the year has left throughput through the business fairly flat," Taylor said, although he added that "the group has now secured a significant amount of its workload towards the end of the 2016, so we have good visibility as a group for this year. We are over capacity for a good part of the summer, much like we were in 2015, so hopefully we will see the same benefits as we did last year".
The company had also noted in February that its GBP4.9 million purchase of the Shafton facility in Barnsley in December was not expected to have any material impact on the trading of the group in 2016.
Chief Executive Mark Smith told Alliance News the Shafton Steel Services business, which was set up at the beginning of the year at the Shafton site to provide steel processing services, is anticipated to generate around GBP2.0 million revenue annually.
Smith also noted the company will be investing more funds into the Shafton property in March 2017 once "an incumbent tenant in one of the buildings" has left the property. Smith said, at this point, the company will be able to increase the capacity of its Billington Structures business.
"Shafton has significant lifting capabilities which present opportunities for us to progress the development of bolt-on companies and divisions, which offer sympathetic services to structural steel industry," Finance Director Taylor said.
"As we look to increase capacity we will be looking to recruit generally across the board, thanks to the efficiencies we are achieving are in design and manufacture," Taylor added.
Shares in Billington were down 2.7% at 270.00 pence on Tuesday.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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