Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — FY2016 Earnings Presentation
25 slides from Steel & Tube's earnings presentation, August 2016
Slide 1: 2016 Annual Update
2016 annual Update Dave Taylor, CEO 2016 Annual Janie Elrick, CFO August 2016 update Dave Taylor, CEO Janie Elrick, CFO August 2016 1
Slide 2: Disclaimer
Disclaimer This presentation, August 2016, provides additional comment on Steel & Tube’s financial results announcement for the period ending 30 June 2016. 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: $516m – up $14m or 3% Profit before Tax: Headline $33.2m – up $3.4m or 11% Underlying $26.9m – down $2.9m or 10% EBIT Underlying $30.5m – down $2.8m or 8% Net operating cash flow: $25.1m – up $1.2m Net tangible assets / share $1.47 – down 12c Net debt $95.6m
Slide 4: Highlights
Highlights Underlying results at the top end of guidance but impacted by continuing low steel prices eroding margins Overall volumes consistent with market volumes Bowden Rd property sale improved headline results Cash flows healthy with good controls on inventory and debtors Delivered new
Slide 5: Highlights – Aquaduct Opportunities
Highlights – Aquaduct Opportunities • Steady increase in overall plastic pipe market • Distressed assets, business rebuilding • Competitive advantage is • Revenue $3.6m, EBIT $(0.2m), F17 $10m • Lower installation cost • Further opportunities in large projects 24 months • Significant reduction in pr
Slide 6: Highlights – MSL & Stainless
Highlights – MSL & Stainless MSL Stainless No. 1 in the market No. 1 in the market Revenue $31m, EBIT $5m (11 months) Growth – One Company customer synergies Growth – One Company customer synergies Comflor – strong growth due to construction activity Procurement – combined purchasing power Inventory
Slide 7: Key Challenges in F16
Key Challenges in F16 • Most substantial impact on F16 results is continuing low steel prices − Significant Chinese excess capacity, 112m tonnes steel exported, this is expected to continue through 2016 − Lowest steel prices in 13 years. Globally recovered in 2nd half, but impact on NZ market will b
Slide 8: High Quality Procurement
High Quality Procurement • Compare to other distributors: • We support the local NZ/Aust steel industry • We rely less on China product • Long term quality conformance is better than 99.7%. F16 99.2% Source: S&T Research 8
Slide 9: Sector Exposures
Sector Exposures Diversification across sectors, significant exposure to high growth construction sector Source: S& T Research 9
Slide 10: Strong performance, despite falling steel prices
Strong performance, despite falling steel prices • Falling steel prices since 2011, have been offset by improved business performance • Steeper decline in prices over 2015 has impacted faster than the business improvements Source: SBB & S&T Financial reports 10
Slide 11: Business Performance
Business Performance In-line with top end of previous guidance Underlying $13.8m 11 Source: S&T financial reports
Slide 12: Business Performance – Key EBIT Contributors
Business Performance – Key EBIT Contributors Strong gains in productivity and cost savings 12
Slide 13: Balance Sheet Strength
Balance Sheet Strength Debt: Debt + Equity circa 35%, 30% with adjusted assets 13
Slide 14: Business Performance
Business Performance Operating cash remains strong 14 Source: S&T financial reports
Slide 15: Outlook
Outlook Strategy refreshed Previous One Company, facility consolidation, inventory Strategy management, acquisition to support market position Renewed Strategy 2016 Volatile steel prices • Reposition underlying cost structures likely to remain Acquisitions & Growth • Enhance capability and reach Man
Slide 16: Outlook
Outlook Improving performance Global • World steel demand remains soft, with oversupply in both raw materials and finished steel, encouraged by prices increases in early Markets 2016, iron ore firming, and steel pricing following • China commitment to remove excess/aged capacity Local • The New Zeal
Slide 17: Thank you
2016 annual Update Dave Taylor, CEO Janie Elrick, CFO August 2016 Thank you 17
Slide 18: Global Markets
Global Markets Steel production • Global steel output has dropped slightly during 2015 compared to PCP. This trend seems to continue into 2016 • This shrinkage included most countries including, very significantly, China • The major exception was India • Demand for construction steel has dropped in
Slide 19: Global Markets
Global Markets Steel and raw material price movement • Additional iron ore production continues to come on line increasing capacity • Raw material prices hit their lowest level for 10 year at the financial year mid-point • Rebounded quite strongly in early 2016 and current forecasts indicate prices
Slide 20: Global Markets
Global Markets Stainless steel prices and production • Production declined marginally in 2015 and current trends indicate a drop in 2016 • China is the leading producer and is following the global trend • Demand forecast is positive despite the current downtrend • Prices correlate closely with nicke
Slide 21: Global Markets
Global Markets Exchange rates • The NZD has appreciated in recent months against key currencies • Helped temper the volatility in global steel prices in 2016 • Remains elevated against the AUD 21 Source: ANZ Bank
Slide 22: New Zealand Markets
New Zealand Markets Material volumes • Total steel demand is steady year on year • Construction aligned products continue to grow • Stainless steel demand remains impacted by limited dairy investments • Fastenings market has held steady and less vulnerable to volatility Source: Stats NZ; S&T Researc
Slide 23: New Zealand Markets
New Zealand Markets Key sector trends – building consents ($m & square meters) • Year to June 2016 Non Residential building consent floor area reduced by 1% compared to PCP • This was due to a static growth at Canterbury but Auckland grew by 20% • Although the current $ values are 63% higher, floor
Slide 24: New Zealand Markets
New Zealand Markets Key sector trends – rural • With international dairy prices in free fall, pay-out for the 2016-17 season has been reduced to $4.25 excluding dividend • The drop in prices have been attributed to poor demand from oil producing regions, uncertainties in emerging markets, slow recov
Slide 25: New Zealand Markets
New Zealand Markets Key sector trends – manufacturing ($m) • Generally volatile, but solid growth from non food and petroleum sectors • Equipment and machinery manufacturers are at pre GFC levels • Metal producers remain subdued • Export markets for manufactured goods remain resilient in Australia a