Vulcan Steel (VSL) H2 2024 earnings summary

Executive summary

• FY 2024 was marked by a challenging environment, with revenue down 14.5% to NZ$1,064m, volumes down 9.1%, and gross profit per ton down 7%, reflecting a significant market downturn in both Australia and New Zealand.

• Adjusted EBITDA was NZ$148m (down 32.6%) and adjusted net profit after tax was NZ$40m (down 57.9%), with operating cash flow up 16.1% to NZ$169m.

• Net debt reduced to NZ$276m, supported by strong cash flow and inventory management.

• Diversification reduced reliance on top 20 clients to 9% of sales, and aluminium integration was completed, now core to the metals division.

• Ongoing growth strategy targets new clients, geographies, and further consolidation, with 17 growth initiatives generating revenue.

Financial highlights

• Adjusted EBITDA was NZ$148m, adjusted net profit after tax NZ$40m, and adjusted EPS 30.4c, with gross margin at 35.2%.

• Operating cash flow increased 16% to NZ$169m, and net debt decreased by NZ$64m from June 2023.

• Return on capital employed was 13.4% (20% pre-IFRS adjustment).

• EBIT declined 33% and net profit after tax declined 55% year-over-year.

• Final dividend of NZ$0.12 per share, total dividend for the year NZ$0.24 per share, with payout policy at 60–80% of annual NPAT.

Outlook and guidance

• Sales activity in 1H FY25 expected to remain at low levels similar to 2H FY24, with improvement anticipated as economic conditions recover, especially in New Zealand.

• No earnings guidance for FY25 due to ongoing market uncertainty; trading update planned for November 2024.

• Inflation remains embedded in costs, with pressure from rent and ongoing focus on cost reduction and productivity.

• Focus remains on customer engagement, productivity, and cost efficiency.