The Castlewellan-based steel manufacturer Walter Watson reported turnover of £62m for 2025, a rise of about 5% on the prior year, but saw profit before tax fall by one-fifth to £6.2m as higher energy and operating costs squeezed margins.
Sales up, margins compressed
The group said it achieved a 17% margin in 2025 — described by its directors as a record for the business — against a backdrop of weakening steel prices and subdued construction activity. Cost of sales rose by 8% to just over £51m, while selling and distribution costs were about £1m and administrative expenses increased to roughly £4.2m.
“The group has a record margin of 17pc in FY 2025, which is satisfactory considering the volatile nature of many of our input costs, especially increasing direct energy costs and direct labour costs.”
Directors pointed to continued efforts to drive efficiencies and flexibility in manufacturing as key to offsetting the headwinds. They said ongoing sales and new orders were encouraging amid what they called a "competitive marketplace" with "subdued demand".
Working capital and cashflow pressures
While headline turnover rose, the company reported a significant increase in amounts owed by customers: trade debtors climbed almost 30% to £25m. At the same time, the group has £9m owing to creditors due within a year. Those figures point to higher working capital requirements that can tighten cashflow even when sales grow.
| Metric | 2025 | 2024 |
|---|---|---|
| Turnover | £62m | £59m |
| Profit before tax | £6.2m | £7.6m |
| Cost of sales | £51m+ | - |
| Trade debtors | £25m | - |
| Employees (average) | 227 | - |
Implications for jobs, wages and supply chains
The group employed an average of 227 people in 2025 and reported staff costs of around £9.7m. That equates to an average labour cost of roughly £42,700 per employee, a useful benchmark for the sector though the figure will include a range of roles from shopfloor operatives to managerial staff.
Higher energy and labour costs were singled out by management as principal pressures. For manufacturing firms operating on tight margins, rising utility bills and wage bills can force difficult decisions: either accept lower profitability, pass costs on through higher prices, or seek productivity gains. Walter Watson emphasised efficiency improvements and flexibility in design and manufacture as its chosen route.
- Demand mix: The company sells across Northern Ireland, the Republic of Ireland and Great Britain — diversified markets that can soften the blow from weakness in any single market.
- Price environment: The wider steel sector has seen price falls driven by weaker construction demand, limiting the scope to recover cost increases through prices.
- Cash constraints: Rising trade debtors and near-term creditor obligations could heighten the need for working capital finance.
From a national perspective, the results underline the precarious position of much of UK manufacturing: firms are often caught between rising input costs and softer end-market demand. The statement from Walter Watson reflects this balancing act — growth in volumes and market share on one hand, and compressed profits and stretched working capital on the other.
For employees, the message is cautiously positive: turnover and headcount have been sustained, and management highlights efficiency gains rather than redundancies as the response to cost pressures. For customers and suppliers, the rising debtor book is a reminder that growth does not automatically translate into stronger cash liquidity, which could affect payment terms and bargaining power along the supply chain.
Investors and lenders will be watching whether the firm can convert improved operational efficiencies into durable margin recovery, particularly if energy costs and labour pressures persist. The ability to keep sales rising while managing working capital will determine whether the business can protect jobs and pay in the months ahead.
