16 Aug 2013

Steel Tube increases profit despite challenges

7:37 pm on 16 August 2013

Steel Tube Holdings has lifted annual net profit 19%, boosted by the Christchurch rebuild despite a number of adverse headwinds.

Net profit for the year ended June rose to $15.6 million from $13.1 million the previous year.

The company's sales fell 3% to $393 million, reflecting lower steel prices in New Zealand dollar terms because of the currency's rise. Steel prices in US dollars actually rose.

Steel Tube says it had expected its second half to be stronger but the construction momentum it saw in Christchurch in the first half dissipated in February through April, with a small recovery in May and June.

It says most regions remained subdued during the year, with the exception of increasing residential consents and specific key infrastructure projects in Auckland.

Forsyth Barr analyst James Bascand says the result was broadly in line with expectations.

"The Christchurch rebuild comes down to a timing issue, as much as anything, with the deferral of work," he says.

"We've seen earlier in the week, from Opus International's result, that the first and second quarters were both relatively challenging, although there was an improvement towards the second quarter of the year.

"They have seen a pickup but they're still waiting for significant commercial activity and there's no sign of the key anchor projects coming to market yet."

Steel Tube says the New Zealand economy now appears to be slowly gaining momentum across an increasingly broad range of sectors.

It says its optimism remains tempered until it sees an actual uplift in the sectors it serves.