NORTH Yorkshire structural steel group Severfield-Rowen saw shares drop by ten per cent yesterday after warning full-year profits would fall below expectations.

The group, based near Thirsk, North Yorkshire, said due to "tough and very competitive" trading conditions it was taking a more cautious view of its prospects for the year.

Chairman Peter Levine said the group had suffered price pressures from competitors, which would affect margins this year.

The update came as Severfield-Rowen said for the six months to June 30 pre-tax profits rose 27 per cent to £5.1m while turnover was up 36 per cent at £80m.

Mr Levine described the results as "resilient" and said the profits rise was "all the more commendable" in a period of tough trading conditions.

The difficult times saw rival Wescol, the third largest structural steel group in the UK, go into receivership earlier this month.

However, Severfield-Rowen said that while profits would be below expectations, they would still be well ahead of last year.

Then, the group reported pre-tax profits of £6.5m on turnover of £145.8m.

Mr Levine said: "The directors are confidently looking forward to a year of notably improved profitability over the previous year and the continued enhancement of the group's premier position in the industry."

Severfield-Rowen - which employs about 1,000 staff - makes and constructs steel structures for use in buildings.

Projects it has carried out in the six months included an office block in Cambridge for the Department of Farming and Rural Affairs and the Inland Revenue.

It has also worked on the new Scottish parliament buildings on the Royal Mile, Edinburgh, and a new stand at York racecourse.

The group is also BBA's structural steelwork partner on the project to build Terminal Five at London's Heathrow Airport.

Severfield-Rowen added that although prices had "significant room for improvement", future order and inquiry levels were excellent.

Shareholders in the firm will be paid an interim dividend of 5.25p, the same as this time last year. Shares fell 25p to 237p.