Steel & Tube (STU) H1 2025 earnings summary

Executive summary

• Revenue and volumes declined sharply due to weak economic conditions and reduced customer demand, with steel demand at its lowest since the 1990s.

• Net loss after tax was $10.4m for 1H25, compared to a profit of $5.3m in the prior year.

• No interim dividend declared for the period, reflecting prudent cash management.

• Conditional acquisition agreements signed for Perry Metal Protection, Perry Grating, Waikato Sandblasting, and WSB Hamilton for $43.5m plus up to $6m earnout, expected to be earnings accretive from day one with settlement in May 2025.

• Strategic focus on expanding high-value, less cyclical product offerings, leveraging M&A, and maintaining strong cash reserves with no borrowings.

Financial highlights

• Revenue for 1H25 was $196.0m, down 25% from $261.8m in 1H24; volume fell 22% to 48.7k tonnes.

• Normalised EBITDA dropped to $2.0m from $21.9m in 1H24; EBIT was a loss of $10.9m.

• Gross margin per tonne declined to $762 from $926 in 1H24, with margin pressure from competitive pricing and product mix.

• Net cash position improved to $17.5m at December 2024, with no borrowings and a $100m undrawn facility.

• Inventory reduced to $109.6m from $121.3m at June 2024.

Outlook and guidance

• Market expected to remain challenging in the near term, but positive signs of recovery are emerging, with demand growth anticipated from mid to late 2025.

• Targeting $7m in annualised OpEx savings for FY25, up from the previous $5m target.

• Anticipates material earnings growth as activity increases, supported by lower interest rates and government infrastructure spending.