Profits jump at Steel & Tube

By Phil Boeyen, ShareChat Business News Editor

Friday 15th February 2002

Interim operating profit and net profit have both risen strongly at steel company Steel & Tube (NZSE: STU).

The company says bottom line profit for the six months ended December rose 34% to $9 million, including trading profits and a gain on sale of its interest in Canadian business, A J Forsyth.

"As a result of this divestment, the company is in a very strong financial position," Steel & Tube says.

On a comparative basis for the period for the continuing business in New Zealand, net profit increased by $2.289 million or 45%.

Although total sales fell to $177 million from $195 million due to the sale of the Canadian investment, the company says that sales on a continuing operations basis rose 10%.

"There has been strong demand for steel and allied products from all regions with the exception of Auckland, resulting in similar volumes being sold, compared with the same period last year.

"The Steel Distribution and Processing, Metal Fasteners and Roofing operations posted substantially improved earnings due to an increase in margins and cost saving initiatives combined with the reduction of working capital."

STU is forecasting that the trading environment will remain steady with some improvement anticipated from Auckland later in the year.

It adds that although margins in its Reinforcing operations were eroded due to competition, the division should improve in the second half and has a favourable mix of forward orders on hand.

An interim dividend of 9 cents per share fully imputed has been declared.

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