Steel & Tube (STU) H1 2025 earnings summary

Executive summary

• Announced conditional acquisition of Perry Metal Protection, Perry Grating, and Waikato Sandblasting for NZD 43.5 million plus up to NZD 6 million earnout, expected to be earnings accretive from day one with settlement in May 2025.

• 1H25 results reflect challenging economic conditions, with significant declines in volume, revenue, and earnings year-over-year.

• Net loss after tax was NZD 10.4 million for the first half of FY2025, compared to a net profit of NZD 5.3 million in the same period last year.

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

• No interim dividend declared due to prudent cash management in a weak economy.

Financial highlights

• Revenue for 1H25 was NZD 196.0 million, down 25% year-on-year; volume fell 22% to 48.7k tonnes.

• Normalised EBITDA dropped 91% to NZD 2.0 million; normalised EBIT was -NZD 9.5 million, and NPAT was -NZD 10.4 million.

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

• Inventory reduced to NZD 109.6 million from NZD 121.3 million at June 2024; net cash of NZD 17.5 million at period end.

• No interim dividend declared for 1H25.

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 NZD 7 million in annualized OpEx savings for FY2025, up from the previous NZD 5 million target.

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

• Acquisition of Perry Metal Protection and WSB Hamilton is expected to complete in the second half of FY25, with contingent consideration based on future performance.