Steel & Tube profits plunge 78pc

Construction work on Auckland's Newmarket Viaduct replacement (pictured) helped Steel & Tube in a difficult year. Photo / Brett Phibbs

Steel & Tube Holdings, the largest distributor of steel and allied products in New Zealand, has reported a 78 per cent fall in annual profit in one of the most difficult trading years of its history.

Its share price fell 3.6 per cent to $2.14 in the wake of its earnings report.

The $5.7 million profit in the year to June 30 was down from $26.1 million in the same period last year. It included a one-off charge of $4.2m relating to the removal of depreciation on buildings for tax purposes.

Revenue fell 22 per cent to $380 million. The underlying profit fell 62 per cent to $9.9 million.

The company is paying a final dividend of five cents a share on September 30.

"This financial year has been one of the most difficult trading years in Steel & Tube's history, yet despite this and a poor first-half result, initiatives employed by the company to manage through these tough times generated an improved second-half result," said chief executive Dave Taylor.

Sales in the second half were $189m and the underlying profit was $6.7m.

Taylor said the economic recovery had not flowed into industries important to Steel and Tube.

Government infrastructure projects continued to generate much needed work, particularly due to the Newmarket Viaduct Replacement and the Victoria Park Tunnel.

The construction industry was affected by weakness in property markets and the property development sector in particular.

The distribution business saw a reduction in sales revenue of 25 per cent on 2 per cent less volume over the full year. Piping systems and stainless product groups performed relatively well in the period, reflecting the completion of major projects in the dairy processing and oil and gas sectors.

The manufacturing business saw a reduction in sales revenue of 16 per cent on 5 per cent less volume during the full year.

Although the economy had now entered its second year of recovery the company's prospects remained subdued. It was a case of managing for the times.

- NZPA