Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — Investor Presentation (September 2004)
58 slides from Steel & Tube's investor presentation, Sep 28, 2004
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Slide 2: Presentation to Analysts
PRESENTATION TO ANALYSTS BY NICK CALAVRIAS – CHIEF EXECUTIVE OFFICER TONY CANDY – CHIEF FINANCIAL OFFICER 28 SEPTEMBER 2004 2
Slide 3: Company Overview
Company Overview Steel & Tube Holdings Limited listed on the New Zealand Stock Exchange in 1967 and is ranked 26th by market capitalisation as at 7 September 2004. OneSteel Limited, Australia, currently owns 50.30% of the issued capital. Steel & Tube Holdings Limited has a total of 41 distribution a
Slide 4: Company Overview cont
Company Overview cont During the 1980's, Steel & Tube embarked on a major growth strategy that moved the Company’sactivities significantly away from its core business activities. These investments were made in such diverse businesses as, ¾ New Zealand Motor Corporation Ltd, a retailer, importer, and
Slide 5: Company Overview cont
Company Overview cont In practical terms, this required management to restructure the Company and to either, sell or close, over time, all non core businesses, and, at the same time to look for new opportunities to strengthen the Company’s position in its core business activities. Most of the non co
Slide 6: Company Overview cont
Company Overview cont In 1995, Steel & Tube embarked on an overseas expansion plan resulting in the Company buying a Canadian Based Steel distribution business, jointly with its major shareholder, Tubemakers, Australia, (Onesteel) however, this was sold in 2001 following a change in strategic direct
Slide 7: Company Objective
Company Objective VISION To be a well respected distributor of steel and allied products Key Measures of Success delivering superior returns to our shareholders Total shareholder return OPERATING STYLE which is in the upper quartile of NZ listed companies To provide on a consistent basis first class
Slide 8: Operations
OPERATIONS 8
Slide 9: Steel & Tube Divisional Locations
Steel & Tube Divisional Locations Whangarei Auckland Mt Maunganui Tauranga Hamilton Rotorua Gisborne New Plymouth Napier Palmerston North Nelson Hutt City Wellington Corporate Office Steel Distribution Christchurch Steel Processing Piping Systems Timaru Fastening Systems Dunedin Roofing Products Rei
Slide 10: Overview of Each Division
Overview of Each Division Steel & Tube Distribution - Is the largest distributor of steel and allied products to New Zealand industry with 16 service centres nationwide. It has coil processing facilities in Auckland and Christchurch and plate processing equipment in Auckland, Wellington and Christch
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Slide 21: Relative Size of Each Division
Relative Size of Each Division Steel and Tube NZ Operations Steel and Tube NZ Operations YE June 2003 Sales YE June 2004 Sales Faste ne rs Faste ne rs Hurricane Hurricane Piping Syste ms Piping Syste ms Re inforcing Re inforcing Roofing Roofing Ste e l Distribution Ste e l Distribution 21
Slide 22: Proportion of Rural to City Sales
Proportion of Rural to City Sales Steel and Tube Holdings Group Steel and Tube Holdings Group YE June 2003 Sales YE June 2004 Sales Other Other 39% 39% City City 61% 61% 22
Slide 23: Trading Environment
TRADING ENVIRONMENT 23
Slide 24: Total Exports
Total Exports (Rolling 12 months) 35,000 30,000 $M 25,000 20,000 Feb03 Feb04 Jun03 Jun04 Export $M 30,499 28,582 29,291 29,877 Var $M -1,917 586 24
Slide 25: Consent Numbers
Number of building Consents 1991 -2004 (June year ends) 60,000 All Buildings Total Residential New Houses Commercial New Apartments 50,000 40,000 Consent Numbers 30,000 20,000 10,000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1991 1992 1993 1994 1995 1996 1997 1998 1999
Slide 26: Consent Value - $M
Building Consents 1991 -2004 $M Amount (June year ends) 12,000 All Buildings Total Residential New Houses Commercial New Apartments 10,000 8,000 Consent Value - $M 6,000 4,000 2,000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1991 1992 1993 1994 1995 1996 1997 1998 1999 2
Slide 27: Steel Volumes 1982-2004
Hera Steel Volumes 1982-2004 Imports & Local Production Combined (June year ends) 160000 Total Steel Plate Hot Rolled Sections RHS 140000 120000 100000 Tonnes 80000 60000 40000 20000 0 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 1
Slide 28: Economic Growth
% Quarterly -2.0 0.0 2.0 4.0 6.0 8.0 Mar '97 (A) 2.3 -0.7 Jun (A) 1.8 Sep (A) Dec (A) -0.4 -0.3 0.3 Mar '98 (A) -0.8 Jun (A) 0.8 Sep (A) -0.2 Quarterly,seasonally adjusted Actual Annual Mar Year Ends Dec (A) 0.5 Mar '99 (A) 1.4 2.5 Jun (A) 0.6 Sep (A) 2.6 Dec (A) Mar '00 (A) 1.2 1.2 5.6 Jun (A) -0.5
Slide 29: Regional GDP
Regional GDP $'s 12 months to March 2003 Total NZ $ 126.1b SOUTHERN REGION 26% NORTHERN REGION 48% CENTRAL REGION 26% 29
Slide 30: Key Business Issues
KEY BUSINESS ISSUES 30
Slide 31: Key Business Issues: Cost Increases
Key Business Issues ¾ General costs to run the business increase by about 2 – 3% year on year ¾ Wages increase by about $1.5 million year on year ¾ Combined, our operational expenses increase by approximately 5% p.a. 31
Slide 32: Key Business Issues: Competition and Margins
Key Business Issues ¾ Competitors attempting to take market share away from us ¾ Margins are under pressure from both customers and competitors ¾ Steel price and supply volatility (refer graphs) 32
Slide 33: Exchange Rate
M a r-02 J un-02 S e p-02 De c -02 M a r-03 J un-03 J ul-03 Aug-03 S e p-03 Oc t-03 No v-03 De c -03 J a n-04 F e b-04 M a r-04 Apr-04 M a y-04 J un-04 J ul-04 US D 260 265 300 315 355 340 350 355 355 360 365 375 481 481 566 566 556 556 556 0 6% 20% 26% 42% 36% 40% 42% 42% 38% 40% 44% 85% 85% 118% 1
Slide 34: Exchange Rate
M a r-02 J un-02 S e p-02 De c -02 M a r-03 J un-03 J ul-03 Aug-03 S e p-03 Oc t-03 No v-03 De c -03 J a n-04 F e b-04 M a r-04 Apr-04 M a y-04 J un-04 J ul-04 US D 285 285 297 297 365 365 361 371 386 385 400 410 463 525 525 525 623 623 654 - 0% 4% 4% 28% 28% 27% 30% 35% 35% 40% 44% 62% 84% 84% 84%
Slide 35: Exchange Rate
M a r-02 J un-02 S e p-02 De c -02 M a r-03 J un-03 J ul-03 Aug-03 S e p-03 Oc t-03 No v-03 De c -03 J a n-04 F e b-04 M a r-04 Apr-04 M a y-04 J un-04 J ul-04 US D 227 257 267 282 335 332 342 360 360 366 401 421 520 600 580 569 605 605 595 0 16% 20% 27% 51% 50% 54% 62% 62% 61% 77% 85% 129% 164% 156
Slide 36: Financials
FINANCIALS 36
Slide 37: Over the Last 4 Years
Over the Last 4 Years ¾ EBIT / Sales margins increased 49.0% ¾ ROFE increased 63.0% ¾ Return on SHF increased 106.0% ¾ Earnings per share increased 141.0% 37
Slide 38: NZ Operations EBITA/Sales
NZ Operations EBITA/Sales % (June year ends) 15.0% 10.0% % 5.0% 0.0% 99/00 00/01 01/02 02/03 03/04 EBITA/Sales 8.4% 8.8% 9.9% 10.9% 12.5% 38
Slide 39: Average ROFE
Average ROFE NZ Operations (June year ends) 30.0% 25.0% 20.0% 15.0% % 10.0% 5.0% 0.0% 2000 2001 2002 2003 2004 ROFE 15.5% 15.6% 20.5% 24.9% 25.3% 39
Slide 40: Return on Shareholders' Funds
New Zealand Operations Return on SHF's (June year ends) 40.0 % to SHF's 20.0 0.0 1999 2000 2001 2002 2003 2004 NPBT% 12.4 15.0 18.2 22.7 26.3 35.1 NPAT% 6.6 11.0 11.8 14.8 16.9 22.7 40
Slide 41: Dividends and Earnings Per Share
Dividends and Earnings Per Share (June year ends) 35 30 (Cents) 25 20 15 10 5 0 1999 2000 2001 2002 2003 2004 NZ EPS 11.4 13.4 16.3 20.9 24.5 32.4 TOTAL DIVD 8.0 13.0 16.0 29.0 23.0 37.0 DPS % of EPS 70% 97% 98% 139% 94% 114% 41
Slide 42: Dividend Paid per Share
Dividend Paid per share (June year ends) 20.0 15.0 (Cents) 10.0 5.0 0.0 1999 2000 2001 2002 2003 2004 Int DPS 4.0 6.0 7.0 9.0 11.0 12.0 Final DPS 4.0 7.0 9.0 10.0 12.0 15.0 SPEC DIVD 10.0 10.0 42
Slide 43: Financial Comparisons
Financial Comparisons Shareholder Value 2003 2004 Variance Tax Paid Profit: $21.52m $28.46m 32.0% ROFE: 24.9% 25.3% 19.0% ROSHF: 16.9% 22.7% 34.0% EPS 24.5 cents 32.4 cents 32.0% DPS 23.0 cents 37.0 cents 61.0% Share Price: $3.60 $4.16 16.0% 43
Slide 44: Score Card
Score Card So, How did we do against our objectives of: ¾ Zero LTI’s ¾ TSR in upper quartile of New Zealand listed companies 44
Slide 45: Health and Safety
Health and Safety ¾ One lost time injury for the 12 months ended 30 June 2004 ¾ Steel & Tube were awarded the 2003 Wellington Region Gold Award for Excellence in Health and Safety 45
Slide 46: Shareholder Value
Shareholder Value Total shareholder value increased by $ 78 million for the year ended June 2004 and $269m for the last three years 46
Slide 47: Total Shareholder Return
Total Shareholder Return ¾ STH recognised as best performing share price in % terms when measured against TSR, year on year, for the last 3 years to June 2003 47
Slide 48: Steel & Tube Share Price
Steel & Tube Share Price 4.50 4.00 3.50 3.00 2.50 $'s 2.00 1.50 1.00 0.50 - Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 48
Slide 49: Steel & Tube vs NZSX 50 Index - Relative Performance
Steel & Tube (Gross) vs NZSX 50 Index - Relative Performance 190% 3.00 2.50 2.00 1.50 1.00 Jun00 Jun01 Jun02 Jun03 Jun04 0.50 3/09/2004 Note: NZSX 40 Gross Index prior to 1 January 2001 49
Slide 50: Steel & Tube vs NZSE Small Cap Index - Relative Performance
Steel & Tube vs NZSE Small Cap Index - Relative Performance 3.00 2.50 129% 2.00 1.50 1.00 Jun00 Jun01 Jun02 Jun03 Jun04 3/09/2004 0.50 50
Slide 51: Steel & Tube vs Fletcher Building - Relative Performance
Steel & Tube vs Fletcher Building - Relative Performance 3.00 2.50 2.00 50% 1.50 1.00 Jun00 Jun01 Jun02 Jun03 Jun04 0.50 3/09/2004 51
Slide 52: Market Outlook
MARKET OUTLOOK 52
Slide 53: 2004/05 Market Outlook
2004 / 05 Market Outlook ¾ GDP growth expected to reduce from 5.0% to 3.0% ? ? ¾ Net migration growth numbers to reduce considerably ¾ Strength in consumer spending to remain near term 53
Slide 54: 2004/05 Market Outlook
2004 / 05 Market Outlook ¾ Average prices for steel to remain at similar levels for the foreseeable future with some upside ¾ Construction of new dwellings to remain at similar levels for the first six months of our financial year 54
Slide 55: 2004/05 Market Outlook
2004 / 05 Market Outlook ¾ Commercial construction infrastructure to increase substantially ¾ Rural New Zealand and the manufacturing sector to remain steady 55
Slide 56: Corporate Activity / Strategic Direction
Corporate Activity / Strategic Direction ¾ Core business definition - The distribution of steel and allied products - Base metal manufacturing” 56
Slide 57: Corporate Activity / Strategic Direction
Corporate Activity / Strategic Direction ¾ Purchased Hurricane Wire Products in April 2003 for $25 million ¾ Seeking more growth opportunities through ‘bolt-on’ type acquisitions in the short term 57
Slide 58: Thank you for your interest in Steel & Tube
Thank you for your interest in Steel & Tube 58
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