Strong Return to Profit for Steel & Tube in New Zealand
New Zealand based Steel & Tube Holdings Limited has reported its audited results for the 12 months ended 30 June 2021. Financial performance has significantly improved versus the prior year, with positive economic activity driving increasing demand for steel across a number of sectors and the execution of strategic initiatives delivering significant structural cost reductions. Revenue was up 15% to NZD 480.0 million, EBIT significantly improved to NZD 21.8 million with normalised EBIT up from NZD 0.4 million in FY20 to NZD 19.0 million. The company had a strong return to profitability with net profit after tax of NZD 16.1 million.
Steel & Tube CEO Mr Mark Malpass said “FY21 was a challenging time for many businesses and communities and we are incredibly proud of our people for standing up supporting our customers and delivering a strong result. Economic activity increased steadily across the year, with a strong recovery in residential construction and infrastructure activity, an uplift in commercial tenders and more recent growth in manufacturing. We are now seeing the benefits of our strategic initiatives and particularly our investment in our people and digital technology. We have seen improvements in all areas, with volumes, revenue and margins recovering across the year and a strong pipeline of secured work. Customer service and delivery have been a priority and the target of much of our digital investment as we implement an omni-channel platform that delivers the optimal experience for our customers. Significant network changes were executed late in FY20 and we now have a national presence that has been optimised to ensure customer access to our wide range of products while also achieving significant underlying cost benefits. While we see continued efficiency opportunities, the network consolidation programme is largely complete.”
He added “Supply chain management has also been an increased focus, with the establishment of the new role of GM Supply Chain & Distribution Centres early in FY21. We increased fast moving inventory in response to current global supply chain and capacity issues while at the same time reducing aged inventory. We are using advanced data analytics to support inventory traceability and pricing governance and controls.”
Steel & Tube operates across two divisions, Distribution and Infrastructure.
Distribution has performed well with growth in sales and gross margins while operating costs have reduced. We are closely monitoring and responding to pricing pressures driven by global commodity pricing, shipping and port costs. Inventory has been optimised, aided by technology, to ensure that high demand products are available and priced appropriately. Our national network, realigned sales team and Customer Excellence Centre are delivering improved customer service and experience.
Infrastructure volumes increased with gross margin improvements from the cost out programme being partially offset with competitive pricing pressure in some areas. Increased activity has been seen in 2H21 as infrastructure and large commercial projects come back on stream. Steel & Tube is well positioned as a large scale, reliable and trusted provider of choice.
Outlook - The focus for FY22 remains on customer delivery, growing sales in attractive segments and continued gross margin improvement. Forward market indicators point to sustained activity levels and there is a positive market backdrop across Steel & Tube’s diversified market positions – manufacturing has been picking up, rural is performing well, there is strength in residential construction and infrastructure, and tenders are now coming through in the commercial space. The company has a strong pipeline of secured contract work and has identified positive growth opportunities in a range of sectors and is well positioned to take advantage of these.