Haley van Leeuwen
Bellwether company Steel and Tube will be one of the
first to report in the listed companies' financial reporting
season this week, brokers expecting its profit to be up by
between $6.6 million and $6.9 million, in line with earlier
Almost two years after Christchurch's deadly February 22
earthquake, construction and supplies companies involved in
the rebuilding are beginning to see more solid work
Craigs Investment Partners broker Peter McIntyre said he
expected to see a ''polarised demand'' for Steel and Tube in
its first-half 2012-13 trading result, due out Friday, demand
from Christchurch being ''strong'' and offsetting ''subdued''
''The share price has had a strong run since November on the
back of positive news on the Christchurch rebuild and the
wider economy,'' Mr McIntyre said.
Forsyth Barr broker Haley van Leeuwen expects revenue to be
up 3.0%, to $209 million, earnings before interest and tax up
7.1%, to $10.4 million and normalised profit up 7.3%, to $6.9
''We expect the increase in earnings to be driven by a
slightly improved earnings before interest and tax margin of
5%, reflecting stronger activity in Christchurch, albeit still
hampered by soft activity outside the Canterbury region,'' she
The focus remained on the medium-term outlook for the
materials sector, the continued increase in Christchurch
rebuilding activity and a general economic recovery at the
fore, Ms Van Leeuwen said.
On the negative side, steel prices during the first half of
2012-13 were on average 15% down on a year ago and had
''stagnated'' during the period at $760 a tonne for
''The lower prices continue to weigh on earnings before
interest and tax margins, and we expect they will have
partially offset any increase in steel demand over the first
half,'' Ms Van Leeuwen said.
Mr McIntyre said the steep decline in the global steel price
during the first quarter was unlikely to have a major impact
on first-half domestic pricing because of a lag effect of
four to six months.
Craigs is forecasting a first-half 2012-13 after-tax profit
of $6.6 million for Steel and Tube, a 3% gain on the same
period last year.
The improvement was driven by lower interest costs and a
''modest improvement'' in sales and volumes, albeit on flat
margins, Mr McIntyre said.
''We are starting to see the momentum in the Christchurch
rebuild beginning to drive a national upturn in
non-residential construction at the end of the second
quarter,'' he said.