Ann: HALFYR: STU: Steel & Tube Holdings Limited 2015 Half Year Results

• Release Date: 19/02/15 08:30
• Summary: HALFYR: STU: Steel & Tube Holdings Limited 2015 Half Year Results
• Price Sensitive: No
• Download Document  5.9KB

					STU
19/02/2015 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS Steel & Tube Holdings Limited

HALFYR: STU: Steel & Tube Holdings Limited 2015 Half Year Results

Director's Report
For the half-year ended 31 December 2014

Steel & Tube's results for the six months to 31 December 2014 reflect strong
growth. We continue to demonstrate earnings and revenue momentum while making
significant investments in facilities, plant and connectivity to improve the
customer experience.

This sustained success is underpinned by hard work, an ongoing programme of
significant operational change and our S&T Stainless acquisition, which
continues to perform in line with our expectations.

Continuing through another year of robust earnings growth signifies Steel &
Tube's ability to deliver sustainable results to our shareholders combined
with enhanced capability and customer experience.

Results
The trading result for the six months to 31 December 2014 is a profit after
tax of $10.8 million.
This is an increase of 35 per cent compared with the same period last year,
and is consistent with expectations.
Sales have increased by $46.5 million, or 22 per cent, to $258.2 million on
improved volumes and margins.
Net operating cash flow improved by $12.6 million to $10.1 million, despite a
minor increase in inventory that reflects the increased sales activity.
The half-year result includes the contribution from our April 2014
acquisition of S&T Stainless for the full period, and comes on the back of
improved markets, even though growth in those markets moderated throughout
the first half.

The net tangible assets per share at 31 December 2014 were $1.58 compared
with $1.56 at 31 December 2013.

Dividend
The Directors have declared a fully-imputed interim dividend of 9.0 cents per
share to be paid on 31 March 2015, to holders of fully-paid ordinary shares,
registered at 20 March 2015.  The amount payable is $7.96 million and a
supplementary dividend of 1.59 cents will be paid to non-resident
shareholders.

Performance
Globally the steel industry remains challenged and within New Zealand
competition is intense. Against this background Steel & Tube has enjoyed a
buoyant first half which has seen our business improve, further cementing our
place as a recognised leader in the industry.

The acquisition of the company now trading as S&T Stainless has enhanced our
nationwide footprint of 48 distribution and processing centres, and created a
strong platform from which we can support the unique needs of local
businesses and the sectors they serve.

We continue to make good progress with our ongoing business improvement
initiatives. In November we opened the first of three purpose-built
facilities as part of our $30 million re-investment programme. The new
Palmerston North site now houses our Processing, Distribution and Stainless
operations, offering easy access for customers to the wide range of products
all under one roof.

Commissioning of a new facility commenced and another facility currently
under construction in Auckland will enhance processing capability, enabling
us to better service the North Island's expanding building and construction
requirements, underpinning our strength in the manufacturing sector.

New digital hardware currently being rolled out across our sites is set to
strengthen communications capabilities and enable faster, real-time
interaction among staff and customers. In addition, we are completing the
first phase of planning for a new enterprise resource system (ERP) which will
further strengthen the customer experience.

We continue to secure significant contracts, providing tangible evidence of
the diverse ways in which Steel & Tube works collaboratively and creatively
with customers to support the economic growth and development of our cities,
towns and communities. These include:

- Auckland's Waterview Connection
- Christchurch's Burwood Hospital
- Central Plains Community Irrigation Scheme
- Govett Brewster Art Gallery, New Plymouth
- The Waiarohia stream Bridge in Whangarei

Our health and safety performance remains strong and consistent with recent
years. Improvements in near-miss reporting and root cause analysis continue,
enhancing the safety culture that underpins all our operations.

Outlook
Against a global scene of increasing geopolitical uncertainty and financial
market volatility, the New Zealand economy continues to advance.

As anticipated, construction has underpinned much of the activity and though
this is likely to plateau, those parts of our business aligned to the sector
are expected to continue delivering strong results.

Pleasingly, manufacturing is steadily improving and we are encouraged by the
latest data which indicates the sector is benefiting from a weaker dollar,
along with pull-through from other sectors.

Rural, however, is somewhat varied. Long-term investments in dairy and food
processing continue and are assisting those parts of the business aligned to
these sectors. The reduction in dairy commodity prices will undoubtedly see
some impact on the sector in the short- to medium-term. There is some offset
in that beef and sheep are enjoying better conditions.

Globally, steel output continues to increase while demand, especially within
China, remains sluggish. Along with deteriorating raw material prices this is
creating downwards pressure on steel prices in US dollar terms. The
significant and ongoing depreciation in the New Zealand dollar, however, has
more than offset this, helping to lift domestic steel prices in recent
months. Should the New Zealand dollar continue to depreciate, domestic prices
are expected to firm further.

Within Steel & Tube, ongoing transformation through the One Company
initiative remains a priority.  We continue to do this while serving our
customers and supporting our people through various change initiatives.
These changes are yielding results and the company is positive about the
second half of the year.

[Ends]
End CA:00260815 For:STU    Type:HALFYR     Time:2015-02-19 08:30:32