Steel & Tube first-half profit up 14%, stronger second half tipped

Steel & Tube Holdings, the building products firm whose majority shareholder exited its holding in October, posted a 14 percent gain in first-half profit and expects second-half results to exceed those in the first six months of the year.

Profit rose to $7.29 million, or 8.3 cents a share, in the six months ended December 31, from $6.37 million, or 7.2 cents a year earlier, the Wellington-based company says in a statement. Sales fell 1.6 percent to $199.6 million.

The shares rose 1.2 percent to $2.57 and have more than recovered from their slump in October, when Australia's Arrium sold its 50.3 percent stake. The company says there are signs of improving demand in the New Zealand market, helped by the rebuild of Christchurch, though manufacturing activity was "suppressed" during the first half.

"Domestic sentiment appears to be strengthening, aided by a reasonable December quarter, increasing construction activity centred predominantly around Christchurch and improving house prices," it says. "Overall, we expect the results of the second half of the year to be ahead of the first six months."

Steel & Tube will pay an interim dividend of 6.5 cents a share on March 28 with a record date of March 15, up from 5.5 cents a year earlier.

Sales missed the $209 million forecast of Forsyth Barr analyst Rob Mercer, though reported profit before one-time items beat his estimate of $6.9 million.

The company says while sales fell, it widened its margins "due to close management of market pricing".

It says the receivership of Mainzeal Property and Construction had no material impact on the company.

(BusinessDesk)

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