Key Points:

Steel & Tube Ltd's share price fell 22 per cent to $2.80 after Australian company OneSteel Ltd said on Friday it was pulling its $4 a share bid for the company.

Steel & Tube took the unusual step of advising the market today that its first quarter tax-paid profit shows an increase of approximately $8.1 million from last year.

The company said the momentum of earnings would continue for the next month or so but there was considerable uncertainty about the second half of the year.

Onesteel said that under the New Zealand Takeovers Code it could pull a bid before offer documents were sent.

OneSteel, which owns 50.27 per cent of Steel & Tube, was trying to buy the shares it did not already own in a deal worth about $175 million. It had previously said funding was not an issue.

"The situation has changed dramatically since OneSteel New Zealand announced its intention to make an offer for Steel & Tube last month," OneSteel managing director Geoff Plummer said.

The company cited increased market volatility and the uncertain outlook for Steel & Tube due to its exposure to the New Zealand economy as the reason for the decision.

Steel & Tube is the largest distributor of steel and allied products, and was formed in 1953 through the merger of three importers and distributors of steel product.

OneSteel said the rationale behind the takeover was to simplify its corporate structure and efficiently manage the Steel & Tube business.

- NZPA