Steel & Tube Holdings said net profits fell 19 per cent to $22.5 million from a year ago, depsite an per cent jump in revenue to $504m.
But the engineering and contracting company said profits in the second half of the year "improved substantially" and were achievedin a rapidly slowing economy.
The company cited a number of challenges to its business, including exchange rate volatility, high interest rates, drought, declining consumer sentiment and a squeeze on finance for property developments.
"Considerable pricing volatility for replacement inventory was encountered in the early part of the financial year, putting pressure on margins," said chief executive Nick Calavrias.
A strong dollar and interest rates were also cited last August, when the company reported a 9 per cent fall in profits, again on increased revenue.
It had been hoped strong dairy farmer earnings flowing through the economy would help these 2008 results.
Substantial price increases in input costs to make steel, such as iron ore, coal and scrap metal coupled with an increased global demand for steel pushed the price of replacement steel inventory up and pushed the domestic price of steel products up, said Calavrias.
As a major supplier of products to the building and manufacturing sectors, Steel & Tube expects a gradual improvement in the construction sector next year due to infrastructure projects and commercial activity relating to the 2011 Rugby World Cup.
It is also hoping a weakening NZ dollar will boost exporters incomes.
"Provided that the New Zealand economy is not adversely affected by global events, we expect to post an improved result in the year ahead," he said.
Steel & Tube shares have fallen this year from highs of around $4 in February and are currently trading at $3.15 each.
