Steel & Tube Holdings Limited has reported its audited results for the 12 months ended June 30, 2024. During the period, a significant decline in activity as a result of economic conditions drove a 21% reduction in volumes, with revenue down 19% to $479.1 million compared to $589.1 million in FY2023.

CEO of Steel & Tube, Mark Malpass, commented: “In what has been a year of significant economic slowdown across New Zealand, we have delivered a solid financial result. Our focus through this downturn has been on controlling the controllables by strengthening customer relationships, maintaining market share and growing higher value products and services, managing costs and expanding our cross-sell opportunities. These strategies have not only enhanced our customer proposition but also improved the business’s operating leverage, which will drive profitability as the economy recovers. We have also built a robust balance sheet which provides optionality to further expand our growth, both organically and through acquisition.”

Normalised earnings were in line with revised June 2024 guidance with Normalised EBITDA of $35.8 million (down from FY2023: $52.9 million) and Normalised EBIT of $14.5 million (down from FY2023: $32.1 million). The company reported a net profit after tax of $2.6 million which includes one-off and non-trading costs. Operating cashflows remained strong and net cash was $8.7 million at year end, with no borrowings.

Further inroads have been made to streamline the business with $5 million taken out of the cost base in FY2024. These cost reductions have more than offset inflation with normalised operating expenses down $3.8 million or 5.2% year on year. A new cost out program has commenced, targeting a further $5 million in savings. Inventory levels have been reduced in line with activity and were down $17.9 million, or 13%, year on year. Reflecting market conditions, the Board has declared a final dividend of 2.0 cents per share, fully imputed. This takes full year dividends to 6.0 cents per share, representing a gross yield of 9.7%.

Looking to the future, Mr Malpass said: “While the timing and pace of an economic recovery remains unclear, our expectation is that conditions should start to improve in the 2025 calendar year.  We are navigating a challenging trading environment, but we are well positioned for demand growth when it returns.”  He also noted that the May 2024 Government budget had allocated $68 billion to infrastructure work over the next five years and is in the process of approving fast track consent legislation, which will improve infrastructure activity in the medium term.

Chair of Steel & Tube, Susan Paterson, said: “With good cash reserves and no borrowings, our strong balance sheet provides resilience in difficult times, the ability to continue to pay dividends to shareholders and the opportunity to grow through organic and M&A investments. Our strategy is delivering tangible results and the company is poised to maximise demand growth and deliver for customers as the economy recovers.”