Ann: FLLYR: STU: Steel & Tube Holdings Limited 20

• Release Date: 16/08/13 10:30
• Summary: FLLYR: STU: Steel & Tube Holdings Limited 2013 Annual Results
• Price Sensitive: No
• Download Document  9.23KB

					

STU
16/08/2013 08:30
FLLYR

REL: 0830 HRS Steel & Tube Holdings Limited

FLLYR: STU: Steel & Tube Holdings Limited 2013 Annual Results

Issuer: Steel & Tube Holdings Limited

Headline: Results for Announcement to the Market

Reporting period: 12 months to 30 June 2013
Previous reporting period: 12 months to 30 June 2012

Revenue from ordinary activities: $393,348,000, (3%)
Profit before tax $21,192,000, 16%
Tax expense - operating income ($5,607,000), 9%
Profit after tax attributable to security holders: $15,585,000, 19%

Current Year Net tangible assets per share: $1.53
Prior Year Net tangible assets per share: $1.49

Final Dividend amount per security: 8.5 cents
Imputed amount per security: 3.31 cents
Supplementary dividend: 1.5 cents
Record date: 13 September 2013
Payment date 30 September 2013

Overview
Steel & Tube delivered a solid year's performance.  The first half saw a
gradual market improvement led by construction activity in Christchurch.
This momentum was expected to continue through the second half but, due to a
number of variables, trading proved to be challenging from February.
Our One Company approach continued on multiple fronts bringing greater
efficiencies to the business with benefits and opportunities for our
customers.
On 9 October Arrium (formerly known as OneSteel) divested their 50.3 per cent
majority shareholding in Steel & Tube mostly to New Zealand institutional and
retail investors.  Steel & Tube returned to the NZX 50 on 14 November 2012.

Financial results
The trading result for the full year to 30 June 2013 is a profit after tax of
$15.6 million compared with $13.1 million for the previous year, an increase
of 19 percent.
Reducing steel prices resulted in sales for the year at $393 million,
compared with $405 million for the previous year, a decrease of 3 percent on
consistent volumes.
Operating cash flow remains strong at $27.5 million and is an increase of
$8.7 million (47 percent) when compared with the previous year.
Working capital was well managed and, with strong operating cash flows,
borrowings reduced to $23.5 million and gearing reduced to 13 percent.
A final dividend of 8.5 cents a share was declared on 15 August 2013.

Trading environment
Global raw-material pricing volatility early in the year led to domestic
price increases for most products and saw a good start to the year.  We
expected the sharp and significant price swings, particularly for iron ore in
the first half to lead to finished-steel price increases.  This was true in
US dollars, but did not materialise locally due to an appreciating NZ dollar
and soft underlying demand. Consequently, the expected price increase in the
third quarter did not occur, and steel prices throughout the year were on
average lower than the prior year.
Domestically, the three key industry sectors for our business; construction,
manufacturing and rural, experienced mixed activity levels during the year.
The first half saw both the rural and manufacturing sectors subdued, albeit
with volatility, whilst construction demand slowly increased, led by
Christchurch.
Christchurch residential construction activity continued to gain momentum and
infrastructure activities maintained target levels.  Our roofing and
reinforcing products, particularly reinforcing meshes experienced good growth
from this activity.  Several commercial build projects, mostly in suburban
areas and rebuild preparatory activities led us to believe the commercial
rebuild was gaining momentum.
Elsewhere in New Zealand, with the exception of increasing residential
consents and specific key infrastructure projects in Auckland, most other
regions remained subdued.  Quoting activity increased in several locations
including Wellington, reversing previous trends but this did not manifest in
increased volumes.
Early second-half indications suggested Christchurch construction momentum
would continue and, with manufacturing finishing the first half reasonably
strongly, expectations were for an improved second half trading environment.

However, February saw the momentum dissipate and demand soften across the
country and this soft market continued into April. May and June saw a small
recovery.  The lower activity was against a domestic economic backdrop of
growing optimism.
Despite this 'mixed' environment, the second-half performance was ahead of
the first and further demonstrates the positive impact on performance of the
company's' various initiatives.

Stronger in Everyway
One Company
We are pleased with the momentum One Company continues to gain with customers
as we held volumes whilst lifting margins in a competitive environment.
Customers are recognising the benefits and several new customer partnerships
were formed during the year.
The supply-chain changes continue with much foundation work now complete.
This will positively impact our overall business effectiveness next year and
beyond.
Investment in plant and equipment continues.  We have commissioned
leading-edge, plate-processing machinery to serve Auckland and the North
Island.  In Christchurch, additions to wire processing have increased our
seismic-mesh capacity and our new commercial-roof profile roll formers have
complemented our range in anticipation of the commercial rebuild.
In Nelson and Hamilton we have consolidated our multiple facilities into new,
single-site operations.  At each location the distribution and the processing
facilities have been brought together to better meet the entire needs of
customers and improve efficiencies. Our National Support Centre moved from
Lower Hutt to a new single-floor location in Petone, purposefully designed to
underpin our One Company culture and working environment.
Developing our workplace culture and our people continued with significant
investment in our Values programme and capability.  Pleasingly, this
commitment is reflected in the latest employee-engagement survey, which
showed improvement across all business areas.
In addition to the numerous One Company initiatives being implemented we
remain focused on the fundamentals of the business. Costs were well managed
despite the additional resources required to give effect to the change
programme.

Health and safety
Steel & Tube places the highest priority on the commitment to the health and
safety of our staff, contractors and visitors to our facilities.  Over the
past 12 months Lost Time Incidents have reduced from four to two and Medical
Treatment Incidents from 14 to eight.  This represents a 40 per cent
improvement on the previous year and we acknowledge the conscientious efforts
of all of our staff.  Steel & Tube staff face high-risk activities everyday,
and we remained focused on addressing those activities with the potential for
injuries to our people. We continued to drive behavioural change across our
organisation towards appropriate and safe practices at all times.

Outlook
The New Zealand economy appears to be slowly gaining momentum across an
increasingly broad range of sectors. While encouraging, our optimism remains
tempered until we see an actual uplift in the sectors we serve.

Clearly, the big opportunity for Steel & Tube is the Christchurch rebuild and
whilst the residential and infrastructure activities continue to offer growth
in certain products, we await the commercial part of the rebuild to
decisively commence. It remains unclear when the key anchor projects will
begin.

Outside of Christchurch, residential consents continue to increase in most
regions and in Auckland especially.  Non-residential consents are also
increasing but to a lesser degree.  Whilst the residential activity will
boost roofing and reinforcing throughout the year, commercial activity is
likely to impact only the 2013/14 second half and beyond.

In the rural sector, the end of the drought, a strong late season and the
latest increase in forecast farm-gate milk prices should see additional
maintenance and equipment expenditure on farm. We expect the sector to
remain resilient and robust for us in the short to medium term.
We anticipate continued volatility in metal, transport and equipment
manufacturing with some pull through for domestic manufacturers as a
consequence of construction activity.
From a global steel perspective, we expect the volatility of raw material
prices to continue and underlying demand to remain soft.  Asian steel
manufacturers continue to face financial viability concerns with steel prices
at the current level.  Over capacity remains and many steel makers are
rumored to be facing losses. Therefore, the global steel manufacturing
industry needs to improve margins and there appears to be increasing
sentiment to find ways to improve pricing.  We expect upward pressure on
steel pricing domestically and a price increase may follow in the first half.

The company's many initiatives including one company, staff engagement,
supply chain and people development are progressing well, and continue to
position Steel & Tube to realise the opportunities from a varied but slowly
improving external environment.
With excellent cash flows, increasing performance and a very strong balance
sheet the company is well positioned for expansion and growth.

For further information please contact Dave Taylor, Chief Executive Officer,
Steel & Tube Holdings Limited, on (04) 570-5001 or
[email protected].

Ends
End CA:00239746 For:STU    Type:FLLYR      Time:2013-08-16 08:30:14