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Steel and Tube's profits still strong


Wednesday 23rd October 2002

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Listed steel distribution company Steel and Tube Holding's first quarter profit was up 21 percent on the same period last year on the tail of New Zealand's economic growth.

Piping Systems, which the company acquired in May, contributed 7 percentage points to the increase.

Chief executive Nick Calavrias said fat farm earnings would continue to push up the company's profits until Christmas, but it needed construction and consumer spending to fill the vacuum as the rural sector drew back.

"We are concerned because farming income is going to be less, and that has been primarily driving the New Zealand economy during the last two to three years," Mr Calavrias told the AGM in Wellington today. The Lower Hutt-based company, half-owned by Australian long products steel maker OneSteel, made a net profit after tax of $18.3 millio n for the year to June 30, up 23 percent on the previous year.

Mr Calavrias said profit for the first six months of the previous year was flat, despite a 30 percent rise in profits for the first quarter.

He did not give a figure for this year's 21 percent rise in first quarter profits.

Steel and Tube starts its buyback programme of up to 8.78 million shares tomorrow, after it decided last month not to make further acquisitions with capital left over from selling Canadian subsidiary AJ Forsyth.

The programme target is to purchase up to 4.39 million shares on-market by September 2003.

This will be matched by off-market purchases from OneSteel's subsidiary Tubemakers NZ to keep its current shareholding under 50.3 percent.

Even after the buyback, the company would be conservatively geared and able to pursue growth opportunities, Mr Calavrias said.

The buyback was the fairest option for shareholders and the company had wanted to avoid a compulsory buyback, he said.

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