Thursday 10th November 2011
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Steel building products seller Steel & Tube sees no let up in difficult trading conditions it has experienced in the first four months of its financial year and is signaling a decline in first-half profit.
The company told shareholders at their annual meeting today that its new financial year started slowly and has remained subdued and challenging for four months.
"Based on the earnings so far and factoring in current activity levels we expect profit after tax for the first half of this financial year to be between $6 and $7 million," the company said.
That compares with an after-tax profit of $8.4 million in the six months to Dec. 31, 2010. Steel & Tube is predicting that internal initiatives, limited volume growth and improved margins on the back of price increases will lead to a better second half.
John Anderson was appointed to the board today and is standing for election.
So far this financial year activity levels have reduced across all sectors and notably in the construction sector, the company said.
Competitive pressures have intensified further in the soft operating environment.
"Inventory costs in the first quarter however continued to increase on the back of firmer global steel prices in the last quarter of the prior financial period and with some competitors prepared to discount pricing early, margins have been impacted," the company said.
Raw material costs are relatively high and local steel costs are now increasing again.
The company believes that the 5.5 earthquake in Christchurch on October 9 may delay the start of the Christchurch rebuild into the second half of the calendar 2012 year.
"Given the distractions and uncertainties created by ongoing global economic issues, we believe the current difficult trading environment will persist in the near term," the company said.
Director Barry Dineen retires at the meeting after 17 years on the board.
Steve Hamer, who has the role of chief executive distribution for OneSteel, joins the board in place of Robert Bakewell.
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