Steel & Tube first-half profit down 33%; new chairwoman

Steel & Tube Holdings, the NZX-listed steel products distributor, reported a 33% drop in first-half profit, hurt by a decline in non-residential construction, but expects things to pick up in the second half.

The company said profit fell to $10.6 million in the six months ended December 31 from $15.9 million in the same period a year earlier.

"This is against a volatile global steel and intensely competitive domestic trading landscape," chief executive Dave Taylor said. He noted that while residential construction activity improved, non-residential construction by floor area dropped  20% in the year to December, contributing to domestic steel volumes remaining some 13-15% below the peaks experienced in 2004/05.

Revenue from ordinary activities fell 4% to $254.5 million while profit before tax was $14.6 million, down 27% on the prior period.

The company said it would pay an interim dividend of 9c a share on March 31, unchanged from the same period a year earlier.

Mr Taylor said profitability was impacted by $1.2 million after tax as S&T Plastics increased capabilities ahead of several contract commitments worth more than $27 million in calendar 2017. Its recent addition, Composite Floor Decks Ltd. had two strong trading months, he said.

He said he expects the second half of the year to be stronger than the first, reflecting the pricing opportunity. He also noted that contracts recently awarded to S&T Plastics, the benefits of cost reduction and CFDL performance through the next six months will deliver improved earnings.

The shares last traded at $2.62, and have gained 43% over the past year.

The company also announced that Sir John Anderson was retiring as board chairman. He was first appointed as a director in 2011 and became chairman in late 2012. Susan Paterson, who joined the board on January 16 will replace Anderson as chairman, effective immediately.

(BusinessDesk)