Prof­its lift for New Zealand’s big­gest steel dis­trib­u­tor

DEMM Engineering & Manufacturing - - NEWS -

Steel and Tube, New Zealand’s big­gest steel dis­trib­u­tor, posted sales of $502 mil­lion for the year end­ing June 2015, with af­ter-tax prof­its up by 20 per­cent to $21.4 mil­lion.

“It’s been a sig­nif­i­cant year for S&T,” CEO Dave Tay­lor told share­hold­ers at the Com­pany’s An­nual Meet­ing. “We have fo­cused our ef­forts on en­hanc­ing ef­fi­ciency and strength­en­ing our core busi­ness.”

S&T has re­cently opened three pur­pose-built fa­cil­i­ties: two in Auck­land (an area that presents around one-third of do­mes­tic steel de­mand) at Sav­ill Drive and High­brook, and one in Palmer­ston North. Their com­ple­tion marks a key mile­stone in S&T’s ex­ten­sive $30-mil­lion One Com­pany rein­vig­o­ra­tion pro­gramme, putting it at the fore­front of New Zealand’s steel dis­tri­bu­tion and pro­cess­ing sec­tor, says the com­pany.

In Au­gust and Septem­ber the S&T an­nounced the ac­qui­si­tion of MSL, dis­trib­u­tors of Fortress Fas­ten­ers, and large bore poly­eth­yl­ene pipe com­pa­nies, Aquaduct and Bosch.

Board Chair­man Sir John An­der­son said the ac­qui­si­tions will take S&T into new and ex­cit­ing ter­ri­tory as well as help­ing to off-set volatil­ity in the com­mer­cial steel mar­ket, and a mod­er­at­ing New Zealand econ­omy.

Dur­ing his speech to in­vestors, Tay­lor warned that in­creas­ing low-priced steel ex­ports and im­ported pre­fab­ri­cated steel was putting New Zealand’s steel in­dus­try un­der pres­sure, adding: “Fin­ished steel prices are now at their low­est level for al­most 13 years.

“Chi­nese ex­ports have in­creased by 38 per­cent in the year end­ing Septem­ber 2015 and will likely ex­ceed 100 mil­lion tonnes this year. Putting this into per­spec­tive, New Zealand’s de­mand across all steel prod­ucts is less than one mil­lion tonnes a year.”

Tay­lor pointed out that many ju­ris­dic­tions have in­tro­duced anti-dump­ing leg­is­la­tion to help pro­tect their steel in­dus­tries, in­creas­ing the fo­cus on those coun­tries where such ac­tions are not be­ing pur­sued, such as New Zealand. He cited the re­cent num­ber of steel mill clo­sures in the UK and the ac­tiv­i­ties of BlueS­cope in Aus­trala­sia as ex­am­ples of the im­pact that low-priced ex­ports is hav­ing on global steel man­u­fac­tur­ing.

“What’s not ap­pre­ci­ated is that th­ese lower steel prices have a sig­nif­i­cant im­pact on dis­tri­bu­tion mar­gins, too. With the de­crease in steel prices over the past three years, New Zealand’s en­tire steel dis­tri­bu­tion prof­itabil­ity is es­ti­mated to have re­duced by $45 mil­lion com­pared to three years ago.” The is­sue, he said, had ac­cel­er­ated in the past 12 months, im­pact­ing the sec­ond half of the 2015 fis­cal year.

Look­ing to­wards this full-year’s re­sults, the profit im­pact will be off-set by the ac­qui­si­tions. Notwith­stand­ing this, con­tin­u­ing global steel dy­nam­ics mean the first half re­sults are likely to be lower than De­cem­ber 2014.

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