Steel & Tube profit sinks 78%

Thursday 12th August 2010

Steel & Tube Holdings, which supplies steel products to the construction industry, posted a 78% slump in full-year profit as a lacklustre construction sector weighed on demand.

The Wellington-based company made a net profit of $5.7 million, or 6.5 cents per share, in the year ended June 30, compared to $26.1 million, or 29.6 cents, a year earlier, it said in a statement. Net income includes a one-time $4.2 million expense from the government’s change to tax treatment of building depreciation.

Underlying earnings slumped 63% to $15.9 million, coming in below the $23 million EBITDA forecast by Forsyth Barr. Revenue shrank 22% to $380 million.

“The construction industry continued to be affected by weakness in property markets and the property development sector in particular,” said chief executive Dave Taylor.

“Of particular concern is the lack of private investment in the non-residential construction market and the commercial construction sector, with the potential for further retraction over the next 12 months.”

Steel & Tube was forced to cut spending after its earnings plunged in the first half, trimming $11.8 million from its operation. It cut some $6 million from its labour bill, and reduced interest repayment costs by $4 million as it reduced debt.

The shares sank 3.6% to $2.14 on the NZX today, and have tumbled 20% this year, outpacing the 5.7% decline on the NZX 50 index.

The company paid a final dividend of 5 cents a share, down from 9 cents a year earlier.

Businesswire.co.nz

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