Vulcan Steel lifts full-year profit on price boom

Vulcan's profit was ahead of its guidance range. Photo / Supplied

Vulcan Steel's full-year profit increased by 91 per cent while its revenue rose 33 per cent to $972.7 million, up from $731.5m a year earlier.

The Australasian steel and metal distributor's net profit increased to $124m in the 12 months to June 30, 2022, up from $64.8m the year earlier.

The profit was ahead of its guidance range of between $93m and $100m issued in April following an increase in demand and prices for steel products, and Vulcan's share were up 3.7 per cent in early NZX trading at $9.60.

Earning before interest, tax, depreciation and amortisation (Ebitda) rose 68 per cent to $224.4m, up from $133.4m.

It's the first full-year result that Vulcan Steel's issued as a public company after it was dual-listed on the NZX and ASX last November.

Last month, it signed a deal to acquire Ullrich Aluminium for $165m.

Vulcan Steel's board declared a dividend of 37.5 cents per share, taking its total dividend for the financial year to 65cps.

Managing director and chief executive Rhys Jones said in the company's annual report that demand throughout the year had been uneven with surges of activity occurring after each lockdown in both New Zealand and Australia.

However, he said Vulcan's overall performance was well ahead of previous expectations.

That was due to an extended period of strong global steel and metal products prices, where the positive impact partially offset a variable volume environment that resulted from Covid-19 and flood-related disruptions in or near some of its operating locations, Jones said.

Vulcan's steel segment revenue rose 39 per cent to $626.2m in FY22 from $450.2m.

Sales tonnes increased by 1.5 per cent to 214,000 tonnes, up from 211,000 tonnes the year before.

Meanwhile, revenue from its metals segment rose $66m, or 23 per cent, to $346.5m.

Sales tonnes increased to about 49,200 tonnes in, up 0.8 per cent from the 48,800 tonnes achieved in FY21.

Rising interest rates and ongoing Covid-19 disruptions in major markets were likely to temper global economic activity and demand for steel and metal products.

Jones said some normalisation in margins would likely occur in FY23 following the stronger-than-expected lift in FY22.

"Vulcan will endeavour to mitigate these market pressures by focusing on our sales discipline," he said.

The company said it expected FY23 Ebitda to be in the range of $215m-to-$235m, with net profit between $83m and $107m.

- BusinessDesk