Severfield - Short-term issues cloud long-term outlook

Severfield remains the leading UK structural steel fabricator, with a strong presence in Northern Europe and an Indian joint venture. However, news that it is required to remediate 12 bridge structures and that its underlying markets are showing signs of short-term weakness have resulted in a downgrade to profit estimates and a material share price correction. We believe the markets will recover in time and that there is potential for third-party cost recoveries relating to the bridge issues, but resolution of either is not likely to be imminent. That said, the stock trades on a low FY26e P/E.