New Zealand Steel Tube profit in H1 slumps by 85pc

Thursday, 12 Aug 2010
Steel & Tube Holdings, which supplies steel building products such as reinforcing rods, reported 85% slump in first half profit, reflecting weaker demand and prices.

Its net income fell to NZD 3.17 million in the six months ended December 31, from NZD 20.8 million.

Sales fell by 30% to NZD 190 million.

Steel & Tube was hurt by a drop in demand for materials for commercial construction in the wake of the financial crisis and recession in New Zealand, while residential demand held near its lows.

Mr Dave Taylor CEO said “Strong competition for reduced volumes and declining steel prices has squeezed margins. The strength and sustainability of any pick up in activity is still uncertain as economic conditions show varying growth rates across our trading partners.”

Mr Taylor said the company's focus on inventory, management of debt and discretionary expenses resulted in a positive operating cash flow of NZD 27.3 million in the first half, from a negative NZD 8.8 million a year earlier.

The company will pay a first-half dividend of 3.5 cents a share.