Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — FY2015 Earnings Presentation
26 slides from Steel & Tube's earnings presentation, August 2015
Slide 1: 2015 FY Update
2015 FY Update Dave Taylor, CEO Janie Elrick, CFO August 2015
Slide 2: Disclaimer
Disclaimer This presentation, August 2015, provides additional comment on Steel & Tube’s financial results announcement for the period ending 30 June 2015. It should be read in conjunction with the documents attached to that announcement, which highlight future outlook expectations of earnings, acti
Slide 3: Financial Highlights
Financial Highlights Revenue: $502m – up $61m or 14% After-tax profit: $21.4m – up $3.5m or 20% EBIT: $33.3m – up $6.5m or 24% Net operating cash flow: $23.9m – up $11.6m or 94% Net tangible assets per share: $1.59/share – up 4c or 2.5% Final dividend: 10c /share 3
Slide 4: Performance Summary
Performance Summary A strong first half aided by robust growth across most sectors In the second half, despite moderating demand and significant softening in Asian finished steel prices, average prices held Strong cash flows with good controls on inventory and debtor management Delivered 3 n
Slide 5: Global markets: Steel and raw material price movement
Global markets Steel and raw material price movement • Emerging markets, notably China, that led to heavy investment in raw material and steel production capacity have slowed • Consequently raw material production capacity outweighs demand and ore prices are oscillating around six year lows • Likely
Slide 6: Global markets: Steel production
Global markets Steel production • Global steel output has remained steady with China still accounting for almost half of the worlds production • Chinese output is also steady despite the reduction in demand • With soft domestic demand Chinese steel exports increased to 94m tonnes in 2014, an increas
Slide 7: Global markets: Stainless steel prices and production
Global markets Stainless steel prices and production • Production continues to steadily increase • Led by China – a major producer/ exporter/ consumer • Global demand also steadily increasing • Prices correlate closely with nickel prices which remain volatile trending down • Recent fall in prices ha
Slide 8: Global markets: Exchange rates
Global markets Exchange rates • Significant depreciation in recent months • This has effectively off-set the softening in finished steel prices • Compounds the finished products’ pricing uncertainty 8
Slide 9: New Zealand markets: Steel volumes
New Zealand markets Steel volumes • Steel demand is steadily increasing led predominantly by construction related-products • Steel intensity has also increased following earthquake to strengthen structures • Stainless steel growing faster than carbon steels following post GFC • Fastenings market als
Slide 10: New Zealand markets: Building consents
New Zealand markets Key sector trends – building consents ($m & square meters) • Year to June 2015 Non Residential building consent values increased by 19% compared to 2013-14 • With respect to square meters the increase was 5% • Auckland & Christchurch continue to lead the way • Year to June 2015 R
Slide 11: New Zealand markets: Actual building work
New Zealand markets Key sector trends – actual building work ($m quarterly) • Non-Residential work volumes increased by 13% over the year ending March 2015 • Led by Canterbury, which increased by 21% • Residential work volumes also increased by 13% during year ending March 2015 • Again led by Canter
Slide 12: New Zealand markets: Rural
New Zealand markets Key sector trends – rural • With international dairy prices in free fall, pay-out for the 2014-15 season was reduced to $4.40 excluding dividend • With excess global capacity chasing poor Chinese demand and Russian embargo, It is expected that pay-out during the following year wi
Slide 13: New Zealand markets: Manufacturing
New Zealand markets Key sector trends – manufacturing ($m) • Generally noticeable volatility from quarter to quarter, however good solid growth thro’ the first half • However activity levels dropped in the second half for both metal, and equipment and machinery manufacturers Source: Stats NZ 13
Slide 14: Business performance – revenue and profit
Steel & Tube Business performance – revenue and profit 14 Source: S&T financial reports
Slide 15: Business performance – key profit contributors
Steel & Tube Business performance – key profit contributors 15
Slide 16: Business performance – operating cash
Steel & Tube Business performance – operating cash 16 Source: S&T financial reports
Slide 17: Business performance – balance sheet and gearing
Steel & Tube Business performance – balance sheet and gearing 17 Source: S&T financial reports
Slide 18: Notes to the Financials
Notes to the Financials • Changes to estimated life of assets: - Review of “heavy machinery” - Machinery estimated life increased from 10 to 20 years; machinery electronics decreased from 10 to 3 years. Applied prospectively only - Financial impact: reduction in depreciation $1.5m for full year • $1
Slide 19: S&T Stainless evolution
S&T Stainless evolution Delivering on the opportunities • S&T Stainless operates as a separate front-end business but with very close links to the rest of S&T • Integration has progressed very well and inline with expectations • Cost and procurement synergies on target. Full delivery dependent on sy
Slide 20: Business initiatives
Steel & Tube Business initiatives • Ongoing reinvigoration and includes the completion of three new purpose-built facilities - Palmerston North brings Processing, Distribution and Stainless operations under one roof. Opened November 2014 - Savill Drive will augment processing capability and efficien
Slide 21: Making New Zealand Stronger
Steel & Tube Making New Zealand Stronger • S&T’s One Company offering, technical expertise and innovative solutions contribute to New Zealand’s commercial, infrastructure, cultural and leisure projects: - Waikato: Avantidrome, home of cycling - Wellington: Arras Tunnel, Pukeahu National War Memorial
Slide 22: Outlook
Steel & Tube Outlook • The New Zealand’s economy continues to moderate having peaked in 2014 and now facing some challenges, particularly Dairy and aligned industries • This is impacting overall business sentiment • World steel demand remains soft and with oversupply in both raw materials and finish
Slide 23: MSL: Background
MSL Background • Began in New Lynn in 1980 • Eight branches nationwide, each with fully-stocked warehouses: • Auckland (Avondale) • Albany • Hamilton • Mt Maunganui • Hastings • New Plymouth • Palmerston North • Wellington • Christchurch • Employs approx. 100 people • Fortress brand was introduced i
Slide 24: MSL: Strengths
MSL Strengths • One of New Zealand’s largest fastenings businesses • 10,000 product lines • Industry knowledge • Trained sales team • Nationwide distribution network • Strong brand • Merchandising and marketing expertise 24
Slide 25: MSL: Opportunities
MSL Opportunities • Procurement – combined purchasing power • Transport / logistics – shared costs create value • Shared inventory – cross-selling between businesses • One Company – enhanced ability to source and supply complete project requirements • Stand-alone business – adds competitive strength
Slide 26: Thank you
Thank you