Steel and Tube expects to double first half profit

Steel and Tube expects to double its first half profit. Photo / Supplied

Steel and Tube Holdings expects its first half profit to almost double to more than $17m, driven by volume growth and positive market conditions.

The steel supplier, distributor and processor also expects the current positive economic cycle to be stronger for longer.

Steel and Tube's previous first half profit came to $8.9m.

The company recently reported a 14 per cent year-on-year increase in revenue for the first four months of the financial year.

Steel and Tube said its earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be at least $26.5 million in the first half, from $16.8m in the previous corresponding period.

"The significant uplift in expected earnings is being driven by volume growth in target segments and positive market conditions, improved gross margin disciplines and continued reduction in percentage operating costs," the company said.

The guidance assumes no return to lockdowns before the end of the year.

Chief executive Mark Malpass said the company was seeing the benefit of improvements made to the business over the last few years, combined with a backdrop of robust economic activity.

"Market conditions look to remain positive for at least the medium term as the economic cycle is expected to be stronger for longer.

"The current residential boom is expected to moderate, while industrial building, infrastructure and manufacturing are all expected to continue to grow."

Steel & Tube said it had invested in inventory, particularly essential, high-demand products.

"We have a strong pipeline of secured work in place and are well positioned to take advantage of opportunities," it said.

The company did not provide guidance for the second half of the financial year due to the ongoing uncertainty surrounding Covid-19 impacts.

Steel and Tube's shares last traded at $1.23, having gained 89 per cent over the past 12 months.