New era for Steel & Tube

Global economic uncertainty prevails for listed Steel & Tube, which begins a new era following major restructuring, a majority-shareholder $91 million share sell-off and re-entry to the New Zealand Stock Exchange's Top 50 list.

At Steel & Tube's annual meeting in Wellington yesterday, chairman Sir John Anderson outlined how it still remained difficult to form a clear view of the trading landscape "even over the short-to-medium term".

The sovereign-debt issues in Europe were continuing and in part contributing to the decline in China economic activity, which was reducing commodity prices in the Australian resources sector, Sir John told the annual meeting.

Craigs Investment partner-broker Peter McIntyre said while sales were up and the company had a strong balance sheet and cash, the outlook relied heavily on issues in Europe and China.

"Christchurch is not yet the windfall expected and [in all regions] outside Auckland, things are still tough," Mr McIntyre said.

Australian-based Arrium, formally trading as OneSteel, sold its 50.3% majority shareholding in Steel & Tube on October 9 for $91 million.

This sale subsequently allowed Steel & Tube to re-enter the stock exchange Top 50 list last week.

Sir John said demand across all key sectors remained "subdued" and the momentum of the expected Christchurch rebuild was improving but continuing to experience delays.

Steel demand was being restricted to levels "marginally above" the previous year, leading to an intensely competitive trading environment.

While it was pleasing that in the previous financial year, sales had increased 5% to $405 million, profitability was down 23% at $13.1 million, primarily due to increased industry competitiveness, he said.

simon.hartley@odt.co.nz