Manufacturer Steel & Tube has posted boosted revenue and
profit for its full-year result, in part due to its
acquisition of Tata Steel (Australasia), from Indian steel
While the steel industry globally remains in the doldrums,
Steel & Tube appears well prepared to meet rising demand
for not only Canterbury rebuild materials but also several
high-profile large construction projects around the country.
For its trading year to June, Steel & Tube's revenue grew
12.2% from $393 million to $441.4 million while after-tax
profit grew 14.7% from $15.6 million a year ago to $17.9
In April, Steel & Tube purchased Tata Steel (Australasia)
for $28.1 million, rebranding the company S&T Stainless,
which contributed $12.9 million in revenue.
Steel & Tube chief executive Dave Taylor said the Tata
Steel acquisition strengthened the company's position as the
leading stainless supplier within New Zealand, with exclusive
distribution rights to several key product lines.
Aside from the Canterbury rebuild, Steel & Tube's other
projects include Auckland's Waterview Connection,
Wellington's National War Memorial Park and underpass, and
Burwood Hospital in Christchurch.
Mr Taylor said the company was continuing to reinvest for
''Economic activity, and consequently volumes, improved
across most sectors although competition remains intense,
restraining margins,'' he said.
Two new facilities are being built in Auckland, with new
plant and machinery to enhance processing capability and
efficiency, and another purpose-built facility in Palmerston
North is scheduled to open at the end of the year.
Craigs Investment partners broker Peter McIntyre said the
result was ''reasonable'', given present trading conditions,
and Steel & Tube was large enough to be competitive in
the sector, even though its profit margins had declined
because of competition.
''From here on in they will be making the most of
[construction] momentum, in both Christchurch's rebuild and
Auckland,'' he said.
It was positive that S&T Stainless was earning money for
its parent, and while debt had risen to $58 million because
of the acquisition, Steel &Tube's overall debt profile
was under-geared, Mr McIntyre said.
Steel & Tube shares gained 10c to $3.45 following the
Forsyth Barr broker Andrew Rooney said Steel & Tube's
result was ''solid'', particularly given the ongoing
challenges with global commodity prices and competitive
''In saying that, the volume growth was not unexpected, due
to the strengthening construction, manufacturing and rural
activity over the past six months,'' Mr Rooney said.
He noted net operating cashflows declined 55% against last
year, as payments to suppliers and employees increased
significantly, ahead of receipts from customers. Inventory
levels climbed by 38%.
''While there will be an element of this driven by market
activity ramping up, this seems somewhat over the top,'' Mr
Management had highlighted that the underlying domestic
activity outlook for the construction, manufacturing and
rural sectors was positive, and improved during the second
''In saying that, the domestic competition issue ... is
constraining [profit] margins,'' Mr Rooney said.