Ann: HALFYR: STU: 2013 Half Year Results

• Release Date: 15/02/13 10:30
• Summary: HALFYR: STU: 2013 Half Year Results
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STU
15/02/2013 08:30
HALFYR

REL: 0830 HRS Steel & Tube Holdings Limited

HALFYR: STU: 2013 Half Year Results

Issuer: Steel & Tube Holdings Limited

Reporting period: 6 months to 31 December 2012
Previous reporting period: 6 months to 31 December 2011

      Amount ($000) Percentage change
Revenue from ordinary activities: 199,572; (1.64%)
Profit before tax 10,245; 15%
Tax expense - operating income (2,955); 17%
Profit after tax attributable to security
holders: 7,290; 14%

 Current Year Prior Year
Net tangible assets per share: $1.53; $1.47

 Amount per security Imputed amount per
   security
Interim Dividend: 6.5 cents 2.53 cents
Supplementary dividend: 1.15 cents
Record date: 15 March 2013
Payment date 28 March 2013

Review The financial statements attached to this report have been reviewed.

Comments Refer to separate attachment.

The unaudited condensed consolidated interim financial statements have been
prepared in accordance, and comply, with, New Zealand Generally Accepted
Accounting Practice (NZGAAP), New Zealand Equivalents to International
Financial Reporting Standard NZ IAS 34: Interim Financial Reporting and
International Accounting Standard IAS 34: Interim Financial Reporting.

Directors' Report

It has been a successful six months to 31 December 2012 for Steel & Tube. The
on-going One Company and supply-chain initiatives have contributed to an
improvement in the Company's performance compared with the same period last
year.

Results

The trading result for the six months to 31 December 2012 is a profit after
tax of $7.3 million. This is an increase of $0.9 million or 14 per cent
compared with the same period last year and slightly higher than previous
guidance.

Sales decreased marginally by $3.3 million or 1.6 per cent to $199.6 million.
However, margins improved due to close management of market pricing.

The net tangible assets per share at 31 December 2012 were $1.53 compared
with $1.47 at 31 December 2011.

Dividend

The Directors have declared a fully-imputed interim dividend of 6.5 cents per
share to be paid on 28 March 2013 to holders of fully-paid ordinary shares
registered at 15 March 2013. The amount payable is $5.75 million and a
supplementary dividend of 1.15 cents will be paid to non-resident
shareholders.

Arrium's majority shareholding divestiture

A significant development for Steel & Tube during the half year was the
divestiture on 9 October 2012 by Arrium (formerly known as OneSteel) of their
50.3 per cent majority shareholding in the Company. The shares were acquired
by New Zealand institutional and retail investors.

A positive development for Steel & Tube was the return to the NZX 50 on 14
November 2012. This has generated a much greater interest in the Company from
our new shareholders and the wider investment community.

As a consequence of the shareholding change existing Director Sir John
Anderson replaced Dean Pritchard as the Chairman, effective 10 October. Dean
Pritchard and Rosemary Warnock, both formerly Arrium-appointed Directors,
remain as independent Directors.  Steve Hamer Chief Executive of OneSteel
Distribution resigned 9 October and a search for his replacement is underway.
 Independent Director Janine Smith and Chief Executive Officer Dave Taylor
remain as Directors.

Performance

Global uncertainty continues to shape those domestic markets important to
Steel & Tube, notably manufacturing, construction and rural, as well as the
steel sector generally with on-going pricing volatility and sluggish,
worldwide demand.

The start of the new financial year coincided with price increases improving
margins, although underlying demand remained restrained with subdued activity
in the manufacturing and rural sectors.  However, this was offset by
increased construction activity led by Christchurch.

With rising concerns about a slowing Chinese economy and increasingly soft
global demands, pricing for steel raw materials and finished products eased.
This coupled with ongoing intense domestic competition led to pricing
pressures, which reduced some of the earlier margin gains as the half year
progressed.

Christchurch construction activity continued to slowly improve and our
business there remains well positioned.  Auckland activity levels and, in
particular, commercial construction have remained subdued with only the
residential construction sector offering any real sign of improvement.
Manufacturing remained suppressed with metal manufacturing activity by volume
down 6.9 per cent for the quarter ending September on seasonally adjusted
figures. Transport and machinery equipment saw a slight improvement at 0.8
per cent.

Progress continues with the Company's various reinvigoration initiatives
under the banner of 'One Company'.  Two further areas, Nelson and Hamilton,
have consolidated all of their respective businesses into single-site
operations.  The Company's Lower Hutt-based national support centre has been
relocated to a new office facility in the Hutt Valley.

A new plate-processing facility was commissioned in Auckland and resources
have been bolstered in Christchurch.  Extensive staff development and
capability programmes have continued, which are all underpinned by the
Company's brand and values.

The half year saw the introduction of the new supply-chain model with the
culmination of several supply-chain initiatives.  Although the transition
remains in its early days it is pleasing to see some benefits already flowing
through.

As always, health and safety are a priority for Steel & Tube with
considerable effort and focus placed on educating and engaging staff and
particularly on those activities with high risk.  Pleasingly, the number of
incidents resulting in injury was reduced compared with the previous year and
all of those incidents were of minor nature.

Outlook

Underlying demand remains the fundamental issue for the steel industry both
domestically and globally.  Internationally, business sentiment appears to be
more optimistic with the Chinese and the US economies appearing more bullish
and Europe a little more stable.  This is reflected in slow expansions to
manufacturing in the US and emerging markets, although Europe continues to
contract.

Similarly, and despite mixed data, domestic sentiment appears to be
strengthening aided by a reasonable December quarter, increasing construction
activity centred predominately around Christchurch and improving house
prices.

Volatility in manufacturing continues with a weak September quarter countered
by a marginally stronger December quarter.  With the slow improvement in the
economy and other trading partners it is hoped this sector will continue to
deliver growth, albeit likely to be muted by the ongoing strength of the New
Zealand dollar.

With robust overseas demand, the rural sector appears to be more positive
than the previous year. However, generally on-farm spending is slow but
consistent with our expectations.  New investment in processing capacity in
dairy shows a continuing long-term confidence in the sector.

From a company perspective, construction is improving, clearly being led by
the Christchurch rebuild activities.  Other regions are showing an increase
in quote activity across the sector suggesting the non-residential inertia
has bottomed.  The recent appointment of receivers to Mainzeal Property and
Construction Ltd has no material impact on the Company.  Manufacturing is
holding but under pressure, and the rural sector is constant.

With the pick-up in global activity and compounded by a tightening in supply,
iron ore has rebounded from the lows of September 2012 and is currently above
$150 per tonne.  Some mills have already started to increase finished steel
product prices and this is likely to impact the domestic market in the near
term.

At Steel & Tube we remain focused on delivering the various reinvigoration
initiatives that put the customer at the centre of what we do. We believe
our strengthened approach will increasingly generate benefits above those of
the general trading environment.

Overall, we expect the results for the second half of the year to be ahead of
the first six months.

For further information, please contact Dave Taylor, Chief Executive Officer,
Steel & Tube Holdings Limited on (04) 570-5001.
End CA:00232951 For:STU    Type:HALFYR     Time:2013-02-15 08:30:34