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 $4 million to $13.1m for the twelve months to June. 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 $6.4m.
In October, Australian majority shareholder Arrium sold its 50.3 per cent 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.
Chief executive Dave Taylor said 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.
"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," Taylor said.
"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 $13m to $6m.
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. Chairman John Anderson said the company remained focused on "getting the house in order".
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.
"Earlier in the year, we launched a new range of residential and commercial seismic-reinforcing meshes that are fully compliant with the revised building codes," Taylor said.
"The new-generation meshes, along with other products from our extensive product portfolio, are aggregated under the One Company philosophy, which has created the Steel & Tube 'Residential Offer' for builders and merchants in Christchurch."
With the exit of Fisher & Paykel Appliances from the NZX50 after it was taken over by a Chinese company, Steel & Tube today returns to the index.
Its shares had fallen 2.7 per cent to $2.14 at the time of writing.