Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — FY2014 Earnings Presentation
23 slides from Steel & Tube's earnings presentation, Aug 15, 2014
Slide 1: 2014 Update
2014 Update Dave Taylor, CEO Janie Elrick, CFO August 2014
Slide 2: Disclaimer
Disclaimer This presentation, 15 August 2014, provides additional comment on Steel & Tube’s financial results announcement for the period ending 30 June 2014. It should be read in conjunction with the documents attached to that announcement, which highlight future outlook expectations of earnings, a
Slide 3: Global Markets: Commodity prices
Global Markets Commodity prices • Raw material prices continue to decline, iron ore especially • Lowest price in five years • Forecast is to remain low • Scrap has remained relatively stable, although may experience downwards pressure if iron ore remains low • Finished steel prices mirror the soften
Slide 4: Global Markets: Exchange rates
Global Markets Exchange rates • Significant strengthening of NZD over the long term against both US and Australian dollar • Higher NZD effectively makes imported steel cheaper • …and compounds the finished steel pricing softness
Slide 5: Global Markets: Steel production and industrial activity
Global Markets Steel production and industrial activity • Global steel output continues to grow, driven primarily by China • Soft domestic demand is increasing Chinese exports • Manufacturing activity remains subdued including much of Asia Source: International Steel Association & Markit
Slide 6: Global Markets: Stainless steel price and production trends
Global Markets Stainless steel price and production trends • Production steadily increasing over past four years since GFC • Increase led by China – a major exporter • International prices correlate closely with nickel prices which are very volatile • Indonesia is a major supplier of nickel ore to C
Slide 7: New Zealand Markets: Steel volumes
New Zealand Markets Steel volumes • Steel demand is steadily recovering led by construction related-products • …but still down approximately 10% on pre-GFC demand • Stainless steel demand is recovering faster than carbon steel • Driven by food and dairy processing and viticulture Source: Stats NZ; S
Slide 8: New Zealand Markets: Building consents
New Zealand Markets Key sector trends – building consents ($m) • Non-residential consents increased 11% to $4.6 billion, year ending June 2014 • Non-residential consents, at $490 million for June 2014, was the second-highest ever monthly figure • Led by Auckland and Christchurch • Residential consen
Slide 9: New Zealand Markets: Actual building work
New Zealand Markets Key sector trends – actual building work ($m quarterly) • While consents are increasing, actual building work lags – especially in the residential sector • Despite this, residential building work increased by 15% over the quarter and by 21% over the year • Non-residential work in
Slide 10: New Zealand Markets: Rural
New Zealand Markets Key sector trends – rural • International dairy auction prices rose to record level in October 2013 • Highest-ever payouts for milk solids • Most dairy farmers increased production • International prices continue to fall this year – 50% to date in NZD • Fonterra’s reduced payout
Slide 11: New Zealand Markets: Manufacturing
New Zealand Markets Key sector trends – manufacturing ($m) • Volatility continues from quarter to quarter • Excluding food, activity increased by 3% in the year ending March 2014 • No increase in the year for metal products or equipment manufacturing sub-sectors Source: Stats NZ
Slide 12: S&T Stainless: Background
S&T Stainless Background • Acquired the New Zealand business of Tata Australasia • No. 2 by market share but very close to No.1 • Predominately stainless steels • Products – sheet and coil, hollows and pipes, merchant bar, architectural, specialist plumbing etc • Processing – coil processing, automa
Slide 13: S&T Stainless: Assets and acquisition price
S&T Stainless Assets and acquisition price
Slide 14: S&T Stainless: Historical performance
S&T Stainless Historical performance Excludes Tata internal management fees & one-off costs Only includes continuing business operations
Slide 15: S&T Stainless: Opportunities
S&T Stainless Opportunities • Created the No.1 stainless player with a nationwide footprint • Stainless market is improving • Food and dairy, wine and beverage, including repairs following Seddon earthquakes • Nickel price has increased 33 per cent in 2014 • COMFLOR has a strong market presence and
Slide 16: Business performance – revenue and profit
Steel & Tube Business performance – revenue and profit Source: S&T financial reports
Slide 17: Business performance – operating cash
Steel & Tube Business performance – operating cash Source: S&T financial reports
Slide 18: Business performance – balance sheet and gearing
Steel & Tube Business performance – balance sheet and gearing Source: S&T financial reports
Slide 19: Business performance
Steel & Tube Business performance • Strong year with improved top and bottom-line results, boosted by the acquisition of Tata NZ (now rebranded as S&T Stainless) in April • Trading impact was $13 million and profit after tax was $612 thousand • Full trading result for year to 30 June 2014 • After-ta
Slide 20: Trading environment
Steel & Tube Trading environment • Economic activity and volumes improved across all the sectors, although volatility remained due to project activity • Auckland and Christchurch led construction activity - products aligned to this sector saw solid growth • Government’s commitment to infrastructure
Slide 21: One Company reinvigoration
Steel & Tube One Company reinvigoration • One Company operating model continues to gain momentum – customers now experiencing the benefits • Other key customer partnerships formed this year • $30 million reinvestment underway – three new facilities being built: 2 in Auckland, 1 in Palmerston North •
Slide 22: Outlook
Steel & Tube Outlook • Global uncertainties continue: • Geopolitical risks increasing and economic forecasts reducing across multiple regions • Chinese domestic steel demand softening • Steel raw material prices remain soft • Despite optimism, some signs are that New Zealand economy appears to be mo
Slide 23: Thank you
272e0 LiLi st Thank you