Steel & Tube profits jump 16pc after strong first half

Photo / Mark Mitchell

Steel & Tube Holdings, which supplies steel products to the construction industry, posted a 16 per cent gain in full-year profit, reflecting strong trading in the first half, which dissipated as expected in the second six months of the year.

Net income rose to NZ$26.1 million, or 29.6 cents a share in the 12 months ended June 30, from NZ$22.5 million, or 25.5 cents a year earlier, the Wellington-based company said in a statement. Sales fell 4 per cent to NZ$484 million.

Demand for steel building products surged in the first half, when a global shortage forced up prices and allowed Steel & Tube to target higher-margin sales. Trading fell away in the second half, as a weak domestic economic sapped demand and squeezed margins, while weaker commodity prices dimmed sales in the rural sector. The slump in the second half looks set to endure, the company said today.

"The company expects to see a continuation of the current soft volumes and resultant pressure on margins," acting chief executive Tony Candy said. "There is some prospect of an improvement in 2010 if, as economic forecasters predict, the country emerges from recession and demand picks up."

Steel & Tube shares climbed 1.3 per cent to NZ$3.15. They have climbed 26 per cent since hitting a low in late April.

The company's distribution business, which includes Steel Distribution, Stainless Steel, Fastening Systems, Piping Systems and Industrial Products posted a 4 per cent decline in sales in the latest year.

Manufacturing, which includes Roofing products, reinforcing and Fabrication and Hurricane Wire Products also had a 4 per cent sales drop, it said.

Steel & Tube will pay a final dividend of 9 cents a share, down from 10 cents a year earlier. The company had raised its interim dividend to 10cents a share from 9 cents, keeping its annual payments unchanged.

-BUSINESSWIRE