Steel and Tube not for sale, says parent firm

Lower Hutt-based Steel and Tube Holdings was not on the market, its Australian parent OneSteel said yesterday.

"I want to state categorically that Steel and Tube is not for sale," OneSteel chief executive Bob Every said.

His comment follows last Friday's bid by Fletcher Challenge Building for regulatory approval for a takeover of the steel fabricating company - 50.1 per cent owned by OneSteel.

The application, under the name of Fletcher Building's steel division, Fletcher Steel, sought to restore previous approval given by the Commerce Commission which expired in December.

"We basically just want to have the clearance in place," Fletcher Steel communications manager Daryll Hutchison said.

Dr Every said Steel and Tube had strategic value to OneSteel as well as achieving a higher level of profitability in the first half than its Australian counterparts.

Steel & Tube last week reported a $6.7 million after-tax profit for the six months to December, up from $6.4 million in the same period last year.

OneSteel said yesterday its profitability in the first half was poor, and forecast continuing difficult market conditions in the second half.

OneSteel, which was spun off from resources giant BHP and floated on the Australian Stock Exchange in October last year, earlier posted a net profit of $A18.8 million ($23.34 million) for the six months ending December 31, 2000.

On a pro forma basis, OneSteel's earnings before interest, tax, depreciation and amortisation (ebitda) fell 9.2 per cent to $A111.6 million in the first half from $A122.9 million a year ago and its gearing was 41.1 per cent at end-December.

Despite the difficult conditions, OneSteel achieved an increase in gross margins to 4.9 per cent from 4.6 per cent, due to price increases imposed on reinforcing steel, pipe and tube, and across all products at its rural distribution business.

The outlook was clouded by destocking now under way across the industry and it was unclear whether demand had bottomed, Dr Every said.

He would not say whether OneSteel could hold profit steady in the second half.

Despite the weak conditions, OneSteel would attempt to maintain payout ratio levels around 70-80 per cent and had returned an interim dividend of three cents a share, he said.

Shares in OneSteel had eased 1c to 91Ac by mid-morning yesterday in Australia.

Steel and Tube last traded on the New Zealand Stock Exchange down 1c at $1.60.

OneSteel now had acceptances of just over 80 per cent for its bid for metals distribution company Email, which it planned to acquire with Smorgon Steel Group.

It would only extend the offer - due to lapse on Tuesday - if it reached 90 per cent, Dr Every said.

If the bid were successful, it would have a neutral effect on earnings in the 2000-2001 financial year and would begin to be earnings accretive the following year, he said.

- NZPA