Steel & Tube posts 20% gain in full-year profit, says acquisitions will underpin growth

Friday 14th August 2015

Steel & Tube Holdings, New Zealand's biggest steel distribution company, posted a 20 percent gain in full-year profit and said recent acquisitions will be a buffer to slowing economic growth and weakness in global finished steel prices.

Net profit rose to $21.4 million, or 24.5 cents, in the 12 months ended June 30, from $17.9 million, or 20.4 cents, a year earlier. Sales rose to $502 million from $441 million.

Steel & Tube agreed to acquire fastener maker Manufacturing Suppliers for $32 million in cash and scrip last month, having acquired Tata Steel (Australasia) for $28.1 million, renaming it S&T Stainless, last year. At the same time it's part-way through a $30 million reinvestment programme that's included three new facilities that it says will enhance its distribution and processing capabilities.

“The results are particularly pleasing when viewed against the economic challenges of the second half of 2015 when overall growth moderated, ongoing volatility in the global steel environment and a softening of raw material and finished steel prices,” said chief executive Dave Taylor. "Construction has continued to perform strongly, and our S&T Stainless business achieved in line with expectation.”

Recent acquisitions "will help off-set the impact of a slowing New Zealand economy and the ongoing softness in global finished steel prices," he said. Steel & Tube "remains in very strong shape and we look forward to taking the business to a new level in 2016 and beyond.”

The company will pay a final dividend of 10 cents a share, up from 9 cents a share earlier.

Steel & Tube shares last traded at $2.81 and have declined 3.4 percent this year.

BusinessDesk.co.nz

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