Steel & Tube first-half profit down 33pc but upbeat about second half

Steel & Tube Holdings was hurt by a decline in non-residential construction, but expects things to pick up in the second half. Photo / File

Steel & Tube Holdings, the NZX-listed steel products distributor, reported a 33 per cent drop in first-half profit, hurt by a decline in non-residential construction, but expects things to pick up in the second half.

The company said profit fell to $10.6 million in the six months ended December 31 from $15.9m in the same period a year earlier.

"This is against a volatile global steel and intensely competitive domestic trading landscape," said chief executive Dave Taylor. He noted that while residential construction activity improved, non-residential construction by floor area dropped by 20 per cent in the year to December, contributing to domestic steel volumes remaining some 13 per cent to 15 per cent below the peaks experienced in 2004/05.

Revenue from ordinary activities fell 4 per cent to $254.5m while profit before tax was $14.6m, down 27 per cent on the prior period.

The company said it would pay an interim dividend of 9 cents per share on March 31, unchanged from the same period a year earlier.

Regarding specific divisions, Taylor said profitability was impacted by $1.2m after tax as S&T Plastics increased capabilities ahead of several contract commitments worth more than $27m in calendar 2017. Its recent addition, Composite Floor Decks Ltd. had two strong trading months, he said.

Looking ahead, Taylor said he expects the second half of the year to be stronger than the first, reflecting the pricing opportunity. He also noted that contracts recently awarded to S&T Plastics, the benefits of cost reduction and CFDL performance through the next six months will deliver improved earnings.

The shares last traded at $2.62, and have gained 43 per cent over the past year.

The company also announced that John Anderson was retiring as board chairman. He was first appointed director in 2011 and became chairman in late 2012. Susan Paterson, who joined the board on January 16 will replace Anderson as chairman, effective immediately.