Steel & Tube Holdings Limited · NZX:STU
Steel & Tube — HY18 Earnings Presentation
22 slides from Steel & Tube's earnings presentation, Feb 23, 2018
Slide 1: HY18 Interim Results Presentation
STEEL & TUBE HOLDINGS LIMITED HY18 Interim Results Presentation For the Six Months to 31 December 2017 23 February 2018
Slide 2: Becoming a Modern and Innovative Company
BECOMING A MODERN AND INNOVATIVE COMPANY Providing Strength to New Zealand Steel & Tube is New Zealand’s leading steel solutions provider, helping customers build what the country needs. Our aspiration is to be a supply chain participant of scale, delivering superior value to our customers.
Slide 3: Our Business
OUR BUSINESS Steel & Tube is aligned into two divisions to better meet our customers’ needs
Slide 4: Change Programme Underway
CHANGE PROGRAMME UNDERWAY Alignment of strategy, structure and people Supply Chain • Structure to provide clear line of sight for improved • Improve availability & delivery performance accountability • Consolidate and remove duplication • Leverage geographical presence & comprehensive • Increase pro
Slide 5: Change Programme: Key Initiatives in HY18
CHANGE PROGRAMME: KEY INITIATIVES IN HY18 • Refreshed Board with appointment of two new directors - Steve Reindler and Chris Ellis – and the retirement of Dean Pritchard • New organisational structure and leadership team including divisional GMs, CFO and CEO • Change programme initiated and progress
Slide 6: Half Year Results Summary
HALF YEAR RESULTS SUMMARY • Operating earnings consistent with the guidance provided to the market at the ASM in November 2017. Revenue $267.9m • Operating earnings (EBIT) for the six months of $6.7m EBIT $6.7m (HY17: $16.1m). • Result reflects short term impact of working capital Normalised EBIT $1
Slide 7: Earnings Before Interest and Tax (EBIT)
EARNINGS BEFORE INTEREST AND TAX (EBIT) • Operating earnings (EBIT) of $6.7m for the six month period was $9.4m lower $16.1m $15.6m than HY17 ($16.1m). • HY18 includes significant non-trading costs relating to a working capital review ($5.5m) and restructuring activities ($2.6m) and additional earni
Slide 8: Breakdown of Costs
BREAKDOWN OF COSTS • HY18 includes additional four months of expenses from CFDL • $2.6m non-trading costs relating to restructuring activities • Increased depreciation and amortisation costs from recent capital investment programme and HY17 acquisition • Other costs include costs associated with the
Slide 9: Operating Segments
OPERATING SEGMENTS DIVISION REVENUE 300 250 REVENUE: 200 Boosted by CFDL acquisition and a $Millions Infrastructure 150 Distribution number of large irrigation projects 100 for Plastics; partially offset by lower 50 volumes and margin pressures in 0 HY17 HY18 core Distribution and Reinforcing busine
Slide 10: Balance Sheet
BALANCE SHEET $M HY18 FY17 Inventory 127.9 143.0 • Ongoing focus on working capital Debtors 88.8 93.5 Trade and other Creditors (47.3) (54.4) • HY18 includes $5.5m write down of aged inventory to net realisable value following Working Capital 169.4 182.1 a substantial review of inventory holdings Ca
Slide 11: Capital Structure Policy
CAPITAL STRUCTURE POLICY On track to achieve annual targets (on a normalised basis) HY18 Interim dividend of 7 cents per share to be paid on 29 March 2018 Annual Capital Structure Targets: Net debt to net debt + equity within DIVIDENDS PER SHARE target range of < 30% - 35% Cents per share Interim Fi
Slide 12: Five Year Snapshot
FIVE YEAR SNAPSHOT REVENUE 600 EARNINGS BEFORE INTEREST AND TAX (EBIT) 40 500 35 30 400 Revenue up 5% driven by 25 300 recent acquisitions 20 200 15 HY18 EBIT and NPAT results $Millions $Millions 10 100 5 include non-trading costs 0 0 relating to working capital FY14 FY15 FY16 FY17 HY18 FY14 FY15 FY
Slide 13: Operating Review
OPERATING REVIEW Operating Environment Distribution Infrastructure License to Operate
Slide 14: Operating Environment
OPERATING ENVIRONMENT Global Steel • Global demand for steel remains high Pricing • Reduced capacity in China combined with Chinese domestic demand has seen steel exports reduce and firming of steel prices • Highly competitive steel market in New Zealand was slow to respond to cost increases • Most
Slide 15: Trading Environment: Global Steel Market
TRADING ENVIRONMENT Global Steel Market • Global steel output increased by 2.8% to 1.675 b tonnes during 2017 • Increased output was largely absorbed in Asia • East Asian steel prices have risen over the year • Prices for iron ore and coking coal have remained firm, driven by increased demand for ra
Slide 16: Trading Environment: Domestic Market
TRADING ENVIRONMENT Domestic Market Regional pricing impacts • China contributes a significant portion of global steel exports and dominates exports to Asian countries • In 2017, China exports down 30% compared to 2016 • Driven by increased demand from domestic markets • Reducing Chinese exports hav
Slide 17: Distribution
Marc Hainen GM Distribution DISTRIBUTION As part of change programme, we commenced a major Business Performance review of the supply chain with the objective of improving • Stainless: Performing well with benefits from the value we add to our customers and reducing our overall delivered cost. integr
Slide 18: Infrastructure
Ross Pickworth GM Infrastructure INFRASTRUCTURE Continuing to drive focus on quality standards and Business Performance disciplined project management • Rollforming: Volumes impacted by ERP • New leadership under Ross Pickworth system process change; focus is on customer • Number of significant cons
Slide 19: Licence to Operate
LICENCE TO OPERATE Health, Safety • Safety performance improved compared to and Environment 1H17 • Goal of zero harm – number of safety initiatives underway • Strengthened back to work procedures following the summer holiday period Quality • Company-wide update of ISO 9001 processes Management launc
Slide 20: Slide 20
Slide 21: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Reconciliation of GAAP to Non GAAP Measures Unaudited Unaudited $'000 December 2017 December 2016 GAAP: Operating earnings before other gains and financing costs (EBIT) 6,685 16,059 Add/(Deduct) back unusual transactions: Inventory write-down 5,518 - Reorganisation and restru
Slide 22: Disclaimer
DISCLAIMER • This presentation has been prepared by Steel & Tube Limited (“STU”). The information in this presentation is of a general nature only. It is not a complete description of STU. • This presentation is not a recommendation or offer of financial products for subscription, purchase or sale,