Archive | Steel & Tube

Steel & Tube ebit slips at year-end

Steel & Tube NZ Ltd said on Friday it expected its full-year ebit (earnings before interest & tax) to fall 10-15% of the 2016 figure.

When the company issued its half-year results in February, it indicated that the full-year result would be consistent with last year’s.

However, chief executive Dave Taylor said on Friday the second half proved more challenging in the final weeks: “We have faced multiple construction & infrastructure project challenges and delays which have been out of our control, coupled with intense competition in the market, leading to tighter margins, particularly in the construction sector.”

Despite falling short overall, however, Mr Taylor said that, excluding last year’s $6.2 million of gains on the sale of property, underlying ebit for the year to June would be 2.5-8% higher.

Attribution: Company release.

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Updated: Commission files 29 charges against Steel & Tube over mesh

Published 7 June 2017, updated 8 June 2017:
The Commerce Commission said on Wednesday it had filed 29 charges against Steel & Tube NZ Ltd for making false & misleading representations about its steel mesh product known as SE62.

Steel & Tube responded, which appears at the foot of this article.

The commission said it had filed the charges in the Auckland District Court under the Fair Trading Act. They relate to conduct between 1 March 2012 & 6 April 2016 and were part of the commission’s wider investigation into steel mesh.

The commission said in today’s release: “The charges allege that Steel & Tube made misleading representations on their batch tags, batch test certificates, advertising collateral & website that SE62 was 500E grade steel, when it was not. The charges also allege that false & misleading representations were made by Steel & Tube that SE62 steel mesh had been independently tested & certified, when it had not. This included using the logo of an independent testing laboratory on SE62 test certificates when the product had not been tested by the laboratory.”

The commission also filed charges this year against Timber King Ltd & NZ Steel Distributor Ltd in relation to false & misleading representations about 500E steel mesh. The commission said these companies had entered guilty pleas and would be sentenced in August. The commission expects to lay charges against one other company, and is continuing its investigations into one more company.

Background

The commission began investigating after receiving a complaint on 5 August 2015 raising concerns about the validity of claims being made by 3 companies selling steel mesh in New Zealand. This complaint related to problems with a particular size of 500E mesh, which is ductile steel mesh often used in concrete slabs like house foundation slabs & driveways.

The Australia/NZ standard (AS/NZ 4671:2001) mandates various physical characteristics required of steel mesh, and the testing methods that must be applied during their production. In April & May 2016 the commission entered into enforceable undertakings with 3 companies that ensured 500E grade steel mesh could only be sold once it passed specific stringent testing.

In November 2016 the Government made changes to testing requirements, increasing the number of samples which need to be tested, clarifying how that testing is done and requiring testing be done by internationally accredited testing laboratories. The changes were fully implemented on 30 May 2017.

Steel & Tube responds

Steel & Tube said it had been co-operating with the commission throughout its investigation and was aware of the decision to file charges: “The commission’s charges against Steel & Tube in regards to compliance with the testing standard relate to the application of testing methodologies only, not the performance characteristics of the seismic mesh.

“Steel & Tube is working with the Commerce Commission to reach an appropriate resolution of the charges, however cannot comment further as the matter is before the court. Steel & Tube continues to stand behind its products and, since April 2016, all of the company’s seismic mesh has been tested externally by accredited laboratories.”

Earlier stories:
8 April 2016: Steel & Tube undertakes dual mesh testing
5 March 2016: Suppliers recheck as commission questions steel mesh, ministry not worried

Attribution: Commission release.

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S&T confirms acquisition of Composite Floor Decks

Steel & Tube NZ Ltd completed the acquisition of the business of Composite Floor Decks Ltd on Monday. Composite installs steel floor decking systems.

Steel & Tube chief executive Dave Taylor said the companies had had a relationship since 2005, when Composite’s UK-based parent formed it to service the New Zealand market.

Mr Taylor said Steel & Tube had the licence to manufacture & market ComFlor and the acquisition would enhance its supply chain capabilities, creating an end-to-end process from manufacture through to installation.

The consideration was for an initial $13.25 million and 3 earnout payments of $1 million each if financial milestones are met over the next 2 years.

Attribution: Company release.

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Steel & Tube buys Tata business

Steel & Tube Holdings Ltd said yesterday it intended to acquire Tata Steel International Australasia Ltd on 14 April for $27.5 million in cash.

Tata Steel International, a division of the Tata Steel group, is the leading supplier of stainless steel, engineering steels & composite floor decks to the New Zealand & Pacific Island markets. The whole Tata group, based in Mumbai, comprises over 100 operating companies in 7 business sectors.

Attribution: Company release.

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Steel & Tube profit soars but company expects tough conditions to prevail

Published 12 February 2009

Steel & Tube Holdings Ltd increased its net profit after tax for the December half by 143% to $20.8 million, on revenue up 11% to $273.8 million due to the effect of higher steel prices.

 

Earnings/share increased from 9.7c to 23.6c and NTA rose from $1.33/share to $1.52/share.

 

The company will pay an interim dividend of 10c plus 4.93c imputation credit, plus a 1.76c supplementary dividend for non-resident shareholders, payable 30 March.

The improved result included a $3.2 million writeoff for trade debtors.Chief executive Nick Calavrias said the improvement came in variable market conditions: “Construction activity overall was down, led by a substantial drop in housing starts. Commercial construction activity, however, did not suffer to the same extent.“The strong demand for our goods & services from the manufacturing sector, that we saw in the last quarter of our 2008 year, continued into the early part of the new financial year. However, we have experienced a noticeable slowdown since November. Demand from the rural communities, however, remained strong throughout.“Although the value of commercial building activity & infrastructure projects was ahead, the volume of building products consumed by this sector was lower once the effect of price increases was taken into consideration. Volume to the manufacturing sector also reduced as the year progressed, although this was partially offset by strong demand from the rural areas.“Global demand for steel in the early part of the year led to substantial shortages, with most products being on allocation by our suppliers. The division’s response to these trading conditions was to withdraw from high-volume low-margin indent business and to be more focused on the higher-margin mix of products.”

Mr Calavrias said the Hurricane Wire business showed significant improvement as a result of the restructuring in early 2008.Inventory was a problem: “Supply volatility for replacement inventory was encountered for most of calendar 2008. In the first half the combination of shortages & higher input costs for steelmaking, such as iron ore, coal & scrap metal, forced the price of steel products up.“However, the supply position improved rapidly in September at the same time as demand for steel began to stall, causing a substantial build-up of inventory on hand, with levels increasing by $46 million in this reporting period. We expect this to be reduced substantially by April and to be at normal operating levels by year end.”Outlook uncertain

 

Mr Calavrias said Steel & Tube expected tough conditions for some time and lower second-half earnings: “There is considerable uncertainty surrounding the extent & timing of the effect of the global economic slowdown on the economy of New Zealand.The domestic economy has been in recessionary conditions for all of 2008, with the expectation that this will continue for most, if not all, of calendar 2009. Dairy farmers’ incomes for the 2009 year in aggregate are expected to fall by around $3 billion compared with last year, as the price of milk powder retreats from its peak in July 2008.“Construction activity is expected to decline further during 2009. However, with the official cash rate now at the historic low of 3.5%/year, the construction industry could recover more quickly than previously anticipated.“Although exporters will be assisted by the substantial fall of the New Zealand currency, volumes are likely to be subdued until an upturn in global demand returns.“International steel prices & exchange rate volatility have had significant impact on the company’s financial results over recent years. Global demand has stalled, causing steel producers worldwide to cut capacity to match current demand. Although global prices for steel are now in retreat in $US terms, the impact will be softened due to the substantial depreciation of the $NZ.“The Government’s current action to counter some of the effects of the global financial crises, by stimulating the domestic economy through tax cuts and an increase in infrastructure spending, is expected to lessen the impact of the global recession.“In summary, we expect market conditions in the short term to be as tough as we have seen for a very long time, with a good deal of uncertainty, and the deteriorating trading conditions are expected to reduce our second-half result substantially.”

 

Want to comment? Email bobdey@propbd.co.nz.

                                       

Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Buoyant markets lift Steel & Tube profit 32%

Steel & Tube Holdings Ltd increased its June year after-tax operating surplus by 32.2% to $28.5 million, on revenue up 18.2% to $387.8 million & pretax surplus up 31.5% to $44 million.


Earnings/share rose 31.8%, from 24.5c to 32.3c/share.A 15c final dividend takes the year’s dividend payments to 37c, including the 10c special dividend paid last October.Chief executive Nick Calavrias said the economy proved more resilient than expected. With economic growth up from 4% to 5%, consumer spending remained strong, rural spending was steady & demand from the construction sector was at record levels.


Mr Calavrias said steel sales rose slightly, but the average selling price was down for the first 3 quarters because the strong dollar made imports cheaper.But in the 4th quarter prices for replacement stock rose substantially, due to increased input costs for steelmaking, coupled with the demand-supply curve changing, predominantly due to increased world demand led by China.Steel & Tube’s roofing operations gained from the high demand for new houses, added to a buoyant re-roof market & steady demand for factories & farm buildings.The buoyant construction sector, led by a growing demand from infrastructure spending & a favourable mix of contracts, helped the company’s reinforcing operations to improve reuslts substantially.Mr Calavrias said although the reduction in migrant growth should slow consumer spending & the demand for new housing, commercial construction & infrastructure were gaining momentum. He said the rural sector should also benefit from the increase in world commodity prices.

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Steel & Tube profit up 34%

Steady market expected

Steel & Tube Holdings Ltd increased December half profit 34% to $9 million though sales revenue fell 8.8% to $177.9 million.

The pretax operating surplus increased 20% to $14.26 million, earnings/share rose from 15.4c to 20.5c and a 9c fully imputed interim dividend will be paid.

The result includes trading profits from AJ Forsyth & Co until it was sold in October, profit over book value & disposal costs. Steel & Tube said the sale left it very strong financially.

In its market report, the company said demand for steel & allied products was strong everywhere except Auckland. Steel distribution & processing, metal fasteners and roofing operations improved earnings substantially, but profit from the reinforcing operations were hit by a lack of suitable projects & margin erosion due to competition.

Steel & Tube expects the trading environment to remain steady, with some improvement in Auckland later in the year, and the reinforcing operation should improve in the second half on a favourable mix of forward orders.

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