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Steel & Tube continues to face challenges - Report
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Thursday, 15 Nov 2012

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Listed steel products distributor Steel & Tube has had a difficult year according to its chairman, who told investors at its Wellington annual general meeting today trading had "more challenging and complex" but it was pleased with performance.

Earlier in the year, the company reported net profit fell almost AUD 4 million to AUD 13.1 million for the twelve months to June 2012. Results for the first half of the current financial year are expected to be in line with the same period last year when it reported profit after tax of AUD 6.4 million.

In October 2012, Australian majority shareholder Arrium sold its 50.3% share to New Zealand retail and institutional investors, bringing most of the company's ownership back into Kiwi hands and giving its management more freedom.

Mr Dave Taylor CEO of Steel & Tube said that there has recently been intense competition across all the products it sells and all the sectors it deals in, especially construction. Products in construction, roofing and reinforcing particularly had margins impacted.

He added that "The start of the new financial year coincided with price increases and margins have improved. The intense competition within the industry has created downwards pressure on prices and hence margins. In recent weeks as Europe appears less volatile and the Chinese economic outlook is a little stronger, raw material prices have rebounded. This in due course will perpetuate steel pricing volatility in the domestic markets over coming months."

Its 'One Company' approach to streamlining its business saw several aspects of its operations streamlined in the year since its last annual meeting. It reduced its inventory from AUD 13 million to AUD 6 million.

At Nelson, it had consolidated three facilities into one so that its steel, stainless, fastenings and reinforcing business was working from under one roof. It is soon to bring three Hamilton sites together in one central location and will be moving its National Support Centre to a new Hutt Valley office shortly when its Lower Hutt lease expires.

In the year ahead, Steel & Tube would be putting more emphasis on product development. It recently launched a new roofing profile with high strength and yield called ST963 for the commercial market.

Source - Fairfax NZ News


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