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Steel & Tube profit falls 19% as margins contract

Thursday 14th August 2008

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Steel & Tube Holdings, which supplies building materials such as reinforcing rods, posted a 19% decline in full-year profit as a slowing economy made it harder to pass on cost increases.

Profit fell to NZ$22.5 million, or 25.5 cents a share in the 12 months ended June 30, from NZ$27.8 million, or 31.4 cents a year earlier, the company said in a statement. Sales rose 8% to NZ$504 million.

The company expects conditions through calendar 2008 will be similar to the first quarter, when the economy shrank 0.3%, amid high mortgage rates, falling property values and rising costs.

Still, chief executive Nick Calavrias said construction activity may pick up in 2009, helped by infrastructure projects and developments related to the 2011 Rugby World Cup in Auckland.

The company expects to report higher profit in the current year, it said. Shares of Steel & Tube were unchanged at NZ$3.15 and have gained 21% in the past month.

By Jonathan Underhill

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