Steel & Tube posts 35% gain in first-half profit on uplift in construction

Steel & Tube [NZX: STU], New Zealand's largest steel distribution company, lifted first-half profit by 35 percent, in line with expectations, following last year's acquisition of S&T Stainless and an uplift in construction activity.

Net profit was $10.8 million in the six months ended Dec. 31, up from $8.03 million a year earlier, the Wellington-based company said in a statement. Sales rose 22 percent to $258 million.

Chief executive David Taylor said the results were pleasing against a global backdrop of increasing geopolitical uncertainty, financial market volatility and intense domestic competition.

"Construction has underpinned much of our increased activity and though this is likely to plateau, those parts of our business aligned to the sector are expected to continue delivering strong results," he said.

The company imports, distributes and manufactures around 58,000 steel products and its key industry sectors include commercial and residential construction, manufacturing, heavy and light engineering, energy, viticulture and rural.

It acquired Tata Steel (Australasia) for $28.1 million last April and renamed it S&T Stainless. Taylor said the results show S&T's ability to maintain earnings and revenue momentum while making significant investments in facilities, plant and connectivity.

In November the company opened new premises in Palmerston North, bringing processing, distribution and stainless operations under one roof. It was the first of three purpose-built facilities underway as part of a $30 million reinvestment programme while construction is underway on a building at Highbrook in Auckland and another is now being commissioned.

Directors have declared a fully-imputed dividend of 9 cents per share or a total $7.96 million to be paid on Mar. 31 to shareholders registered at Mar.20 and non-resident shareholders will be paid a supplementary dividend of 1.59 cents.

Earlier this month the company said it would appeal a court ruling against it following an around $1.75 million claim brought by Rich Lister David Levene's investment firm, holding it accountable for a subsidiary.

Steel & Tube shares climbed 3.1 percent to $3.03.

(BusinessDesk)