Steel & Tube lifts half year profit 165%

Steel&Tube Holdings lifted half year net profit 165 percent or $5.2 million to $8.4 million, with revenue similar to a year earlier at $190.5 million.

In the six months to the end of December, volumes rose 6 percent amid a slowly improving economy, the company said today.

Strong competition continued and despite higher prices than in the previous six months, prices were still below those of the same period last year.

"Most market sectors saw marginal improvements through a period of significant volatility from month on month with October particularly slow."

A fully imputed interim dividend of 6c per share is to be paid.

Steel&Tube said it expected second half year results would be similar to those of the first six months.

It expected to see a slow and gradual improvement in activity across most sectors, except commercial construction where further short-term contraction was expected.

Some improvement in performance was expected from internal initiatives.

So far the economic recovery had been slower than expected, mainly due to lower household spending as many people remained cautious.

From its perspective, both the residential and non-residential sectors, with the exception of infrastructure, remained soft and any improvements would be from low bases, Steel&Tube said.

Rebuilding after the Christchurch earthquake would offer some upside, but indications were that although the final cost of reconstruction activity may be higher than initial estimates, the duration would be longer.

Global steel pricing volatility was likely to continue, with prices likely to increase in the immediate future as the industry tried to recover escalating raw material costs, compounded by floods in Australia with many coal mines unable to produce, Steel&Tube said.

That, combined with a volatile NZ dollar, meant domestic steel prices were likely to keep varying considerably.

The company had implemented a new operating model aimed at advancing the strengths of the its product range and geographic coverage.

Facility rationalisation continued with a further seven business operations consolidated into existing facilities.

Steel&Tube said it came through the Christchurch earthquake "remarkably" well with only minor damage to facilities and stock.

Its share price was up 7c to 234 shortly after the results were released.